The figure given below depicts the cost and demand conditions facing a profit-maximizing monopolist that does not discriminate among its customers. The deadweight loss of monopoly equals _____.
Figure 9.9

A)$5
B)$250
C)$125
D)$500
E)$10

Question

The figure given below depicts the cost and demand conditions facing a profit-maximizing monopolist that does not discriminate among its customers. The deadweight loss of monopoly equals _____.​ ​
Figure 9.9
​

A)$5 
B)$250 
C)$125 
D)$500 
E)$10

Quizplus · Accepted Answer

The deadweight loss of monopoly equals the triangle formed by the intersection of the demand curve and the marginal cost curve, and the vertical lines drawn from that intersection point to the x and y axes. In this case, the intersection point is at a quantity of 5 and a price of 15. The marginal cost curve intersects the quantity axis at a price of 5. Therefore, the deadweight loss is equal to the area of the triangle with base 10 (the difference between 15 and 5) and height 12.5 (the difference between 10 and 5), which is 0.5 x 10 x 12.5 = $125.

The Figure Given Below Depicts the Cost and Demand Conditions