Dead weight loss of this monopoly
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Looking at the attached file, the diagram shows the demand, marginal revenue, and marginal cost of a monopolist.
a. Determine the profit-maximum output and input?
b. What price and output would prevail if this firm's product was sold by price-taking firms in a perfectly competitive market?
c. Calculate the dead weight loss of this monopoly?
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Solution Summary
The expert calculates the dead weight loss of this monopoly.
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a. Determind the profit-maximum output and input?
The output is determined when MC=MR, so the profit maximizing output for monoploy is Q=3
The price is dtermined by looking at the point on demand curve at Q=3, ...
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