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August 1, 2014

Homework Help: economics

Posted by joe on Thursday, January 13, 2011 at 5:50am.

You have the following data. A monopolist produces 1000 units of output per month, and
sells it at the price of 10 each. You know that the monopolist does not do any price discrimination,
and you also know that the price-cost margin of this firm (P-MC)/P is evaluated at 0.2. Estimate the
dead-weight loss associated with this monopoly. Estimate what the perfectly competitive market
price would be in this case (Hint: find MC, represent deadweight loss as a triangle, and solve for
difference in monopoly and competitive output).

*** how do i go about doing this

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