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March 26, 2017

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what is the consumer surplus, producer surplus and deadweight loss if a monopolist has demand p=100-Q and Cost= 10Q

Thanks xox

  • economics - ,

    I presume you can determine the price the monopolist will charge. (hint: MR=100-2Q, MC=10)

    Draw a graph showing the demand line, the MC line, the MR line, the maximizing price and quantity.

    Consumer surplus will be the triangle area below demand but above price. Producer surplus will be the rectangle area below price but above MC, and to the left of Q. Deadweight loss will be the triangle area below the demand curve, above the MC line, and to the right of Q.

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