Answered: The graph depicts market conditions for…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

The graph depicts market conditions for an unregulated, profit-maximizing monopolist that is unable to price discriminate. Assuming the market demand function is equivalent to marginal benefit, the socially efficient level of output in this market is 1000 units of output; deadweight loss is approximiately equal to $________ (since the MC function is not a straight line and deadweight loss is measured as the area of a triangle, it is an appoximation).

$16
$13
$12
$7
$3
0
600
MR
1,000
MC
AVC
ATC
Demand
Quantity

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The graph depicts market conditions for an unregulated, profit-maximizing monopolist that is unable to price discriminate.
Assuming the market demand function is equivalent to marginal benefit, the socially efficient level of output in this market is
1000
✓ units of output; deadweight loss is approximiately equal to $
You are correct
1800
You are incorrect
a triangle, it is an appoximation).
(since the MC function is not a straight line and deadweight loss is measured as the area of

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