BUS 207 Lecture Notes - Lecture 7: Deadweight Loss, Marginal Revenue, Economic Equilibrium
1 Apr 2015
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Determine the profit maximizing output and price of a monopoly if market demand is given by. The industry"s long-run cost is per unit: lac. = lmc = : a monopolist controls the industry. Instead, suppose that the same industry is perfectly competitive. Comment on the differences between the monopoly and competitive results. How much worse off are consumers under monopoly as compared to perfect competition: in pure competition, there are no economic profits in the long run. In pure monopoly, the dominant firm typically earns a positive economic profit. Explain this difference: what is the deadweight loss due to profit-maximizing monopoly pricing under the following conditions: the price charged for goods produced is . The intersection of the marginal revenue and marginal cost curves occurs where output is 100 units and marginal revenue is . The socially efficient level of production is 110 units.
