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ClassOf1 Calculate Deadweight

ClassOf1 Calculate Deadweight

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Published by ClassOf1.com
calculating the dead weight loss of a monopolist.
calculating the dead weight loss of a monopolist.

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Published by: ClassOf1.com on Sep 14, 2009
Copyright:Attribution Non-commercial

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12/04/2012

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Sub: Economics Topic: Micro Economics
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ClassOf1  provides exert guidance for College, Graduate and High school  homework  and live online tutoring on subjects like Finance, Marketing , Statistics , Economics and others. Check out more solved problems in our  Solution Library .
 
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)

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