Figure 14-16
-Refer to Figure 14-16.If the monopoly firm is not allowed to price discriminate,then the deadweight loss amounts to

Question

Figure 14-16 
-Refer to Figure 14-16.If the monopoly firm is not allowed to price discriminate,then the deadweight loss amounts to

Quizplus · Accepted Answer

The deadweight loss is the triangle formed by the intersection of the marginal cost curve and the demand curve, and the monopoly price. In this case, the monopoly price is $2,500 and the intersection of the marginal cost and demand curves is at a quantity of 5. The area of the triangle is (1/2) x (7-5) x ($2,500 - $1,250) = $1,562.50. Therefore, the deadweight loss is $1,562.50 if the monopoly firm is not allowed to price discriminate.

Figure 14-16 -Refer to Figure 14-16.If the Monopoly Firm Is Not Allowed