Use the following table to answer the question : Table 15-1: shows the marginal cost [MC],marginal revenue [FH],and demand [FG] curves for a monopolist who faces constant costs.
Figure 15-1
-Refer to Figure 15-1.Given that P₁= $100,P₂ = $50,Q₂= 2,000 units,and Q₁=1,000 units,what is the deadweight loss of a monopoly?

Question

Use the following table to answer the question : Table 15-1: shows the marginal cost [MC],marginal revenue [FH],and demand [FG] curves for a monopolist who faces constant costs.
Figure 15-1

-Refer to Figure 15-1.Given that P₁= $100,P₂ = $50,Q₂= 2,000 units,and Q₁=1,000 units,what is the deadweight loss of a monopoly?

Quizplus · Accepted Answer

The deadweight loss of a monopoly can be calculated as the area of the triangle formed by the monopoly quantity and price and the competitive market quantity and price. Here, the change in quantity is 1,000 units (2,000 - 1,000), and the change in price is $50 ($100 - $50). The area of this triangle (deadweight loss) is 0.5 * 1,000 * $50 = $25,000.

Use the Following Table to Answer the Question : Table