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Figure: The Monopolist III
-(Figure: The Monopolist III) Look at the figure The Monopolist III. If this monopolist profit-maximizes, it will produce _____ units and charge a price equal to _____. Its producer surplus will be _____, its consumer surplus will be _____, and the deadweight loss is _____.

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Figure: The Monopolist III 
-(Figure: The Monopolist III) Look at the figure The Monopolist III. If this monopolist profit-maximizes, it will produce _____ units and charge a price equal to _____. Its producer surplus will be _____, its consumer surplus will be _____, and the deadweight loss is _____.

Quizplus · Accepted Answer

The monopolist will produce where MR=MC, which is at quantity = 35. At this quantity, the price will be $65 (the point where the demand curve intersects with the MR=MC line). 
Producer surplus is the area above the MC curve and below the price ($65) up to Q=35, which is 1/2*(35-5)*(65-5) = $1,225.
Consumer surplus is the area below the demand curve and above the price ($65) up to Q=35, which is 1/2*(65-35)*(35) = $612.50.
The deadweight loss is the shaded triangle between the demand curve, the MC curve, and the price ($65), which is 1/2*(35-5)*(65-35) = $612.50.

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