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calculating the dead weight loss of a monopolist.
calculating the dead weight loss of a monopolist.

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12/04/2012

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Sub: Economics Topic: Micro Economics
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Question:
calculating the dead weight loss of a monopolist.
Calculate the exact amount of the DWL that would result if this monopoly were allowed tooperate as a profit maximizing firm without regulation.

Solution:
Calculate the exact amount of the DWL that would result if this monopoly wereallowed to operate as a profit maximizing firm without regulation.
DWL
if the monopoly were allowed to operate as a profit maximizing firm withoutregulation would be as follows,From the given demand and cost function, we know that equilibrium price and output of thefirm with regulation, the condition is P= MC,PC =\$100 and QC = 80 units,Pm =\$100 and Q m = 60 units,DWL= ½*(Pm -Pc) (QC
–
Q m)