Table of contents

0. Basic Principles of Economics1h 5m
1. Reading and Understanding Graphs59m
2. Introductory Economic Models1h 10m
3. The Market Forces of Supply and Demand2h 26m
4. Elasticity2h 26m
5. Consumer and Producer Surplus; Price Ceilings and Floors3h 45m
6. Introduction to Taxes and Subsidies1h 46m
7. Externalities1h 12m
8. The Types of Goods1h 13m
9. International Trade1h 16m
10. The Costs of Production2h 35m
11. Perfect Competition2h 23m
12. Monopoly2h 13m
13. Monopolistic Competition1h 9m
14. Oligopoly1h 26m
15. Markets for the Factors of Production1h 26m
16. Income Inequality and Poverty35m
17. Asymmetric Information, Voting, and Public Choice39m
18. Consumer Choice and Behavioral Economics1h 16m

12. Monopoly

Monopoly Efficiency and Deadweight Loss

Microeconomics

12. Monopoly

Monopoly Efficiency and Deadweight Loss

Previous problemNext problem

Struggling with Microeconomics?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

The deadweight loss created by the monopoly is:

$22.5

$45

$90

Previous problemNext problem

Verified step by step guidance

Identify the equilibrium quantity and price in a competitive market by finding where the demand curve (D) intersects the marginal cost curve (MC). This is the socially optimal point.

Determine the monopoly quantity and price by finding where the marginal revenue curve (MR) intersects the marginal cost curve (MC). This is the quantity a monopolist would produce.

Find the price the monopolist would charge by going up from the monopoly quantity to the demand curve (D).

Calculate the deadweight loss, which is the area of the triangle formed between the competitive equilibrium quantity, the monopoly quantity, and the demand curve. The base of this triangle is the difference in quantities, and the height is the difference in prices between the demand curve and the marginal cost curve at the monopoly quantity.

Use the formula for the area of a triangle (1/2 * base * height) to calculate the deadweight loss. This will give you the economic inefficiency created by the monopoly.