Reasons why monopolists do not exhibit resource allocative efficiency. Why monopolists cannot obtain any price they wish. Deadweight losses when a firm produces at Q =MC. Social costs of maximizing marginal utility.

1. The perfectly competitive firm exhibits resource allocative efficiency (P=MC), but the single price monopolist does not. What is the reason for this difference?

2. Because the monopolist is a single seller of a product with no close substitutes, is it able to obtain any price for its good that it wants? Why or why not?

3. Is there a deadweight loss if a firm produces the quantity of output at which price equals marginal cost? explain.

4. It has been noted that rent seeking is individually rational, but socially wasteful. Explain.

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1. The demand curve for a perfectly competitive firm is flat because there are many substitutes available. Monopolists, on the other hand, have a downward sloping demand curve. This means that they are price-makers; they can influence price by changing output. The perfectly competitive firm is too small to do this.

Like the competitive firm, the monopoly's output rule is MR=MC. The price charged to maximize profit is higher on the demand curve than the price that maximizes ...

Solution Summary

Reasons why monopolists do not exhibit resource allocative efficiency. Why monopolists cannot obtain any price they wish. Deadweight losses when a firm produces at Q =MC. Social costs of maximizing marginal utility.

Explain why a certain triangular area is a measure of the deadweight loss of monopoly. What information do you require in order to calculate the size of this triangle?

Provide a graph of the solution of company with a cost function of C(Q)=50+Q^2 and a demand function of P=100-2Q, showing profits and deadweight loss in the graph. Also, provide the actual amount of deadweight loss.

Studies have concluded that the deadweight loss of monopoly power in the US is less than 0.5 percent of GNP. From your knowledge of the determinants of the deadweighlt loss, explain why such a small figure is plausible.

If QD=100-6P and QS=4p
I understand how to get the equilibrium of p=10 and Q=40 but I need to
find consumer and producer surplus ...how does that get calculated?
b) How does the equilibrium change if a price floor of $12 is put in place? Calculate deadweight loss from this price floor.
c) Suppose a tax of t=$2 is

A small town is served by many competing supermarkets, which have constant marginal cost.
(a) Using a diagram of the market for groceries, show the consumer surplus, producer surplus, and total surplus.
(b) Now suppose that the independent supermarkets combine into one chain. Using a new diagram, show the new consumer sur

Price Quantity
$10 0
9 1
8 2
7 3
6 4
5 5
4 6
3 7
2 8
1 9
0 10
a. What price and quantity will the monopolist produce at if the marginal cost is a constant $4.00?
b. Calculate the deadweight l

Problem:
Two Identical Firms (Cournot Duopoly thus q1=q2) with demand of P=100-2Q and cost function of C(Q)=4Q. What is the equilibrium deadweight loss? Show the steps.
Could be:
$128
$256
$384
$512

Suppose you are the surgeon general and your task is to maximize the social utility of the population. to acccomplish this objective you have estimated the following equations:
(1) MSB = 140 - 0.1Qb; (1) is marginal social benefit equation
(2) MSC = 20+0.05Qc; (2) is marginal socialcost equation
a. Graph these showing p