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deadweight loss of monopoly

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?


Solution Preview

Dead weight loss occurs as the monopoly producer produces at a lower quantity and charges a higher price from the consumers. Thus, monopoly is producing at a level lower than the pareto-optimal point and hence deadweight loss. ...

Solution Summary

A deadweight loss of monopoly is depicted.