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    deadweight loss of monopoly

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    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?

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    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.