Refer to the accompanying graph to answer. The supply and demand curves apply to both a monopoly market and a competitive market. The marginal revenue curve applies only to a monopolyWhat would be the deadweight loss in a monopoly market?单项选择题
A
a. $375.00
B
b. $150.00
C
c. $112.50
D
d. $262.50

Question

Refer to the accompanying graph to answer. The supply and demand curves apply to both a monopoly market and a competitive market. The marginal revenue curve applies only to a monopolyWhat would be the deadweight loss in a monopoly market?单项选择题

A

a. $375.00

B

b. $150.00

C

c. $112.50

D

d. $262.50

BlackTom AI · Accepted Answer

The question asks: What would be the deadweight loss in a monopoly market, given the graph where the marginal revenue (MR) curve applies only to a monopoly and the supply and demand curves apply to both markets?

Option a) $375.00
This would imply a very large DWL. In a typical monopoly diagram DWL is the triangle between the socially efficient quantity and the monopoly quantity, bounded by the demand curve and the marginal cost (MC) curve. If you look at the graph, the monopoly quantity is to the left of the competitive quantity, but the DWL is not that large as a pure rectangle area would be. Therefore $375.00 overstates DWL for the depicted quantities.

Option b) $150.00
This value is possible in some diagrams, but it would require a larger gap between the competitive and monopoly quantities or steeper curves than shown. In the provided graph, the DWL area appears smaller than this amount because the triangle between the monopoly quantity and the competitive quantity under the demand curve and above MC is relatively compact.

Option c) $112.50
This is the correct choice given the graph. The DWL in a monopoly is the triangular area between the demand curve and the MC curve from the monopoly quantity to the socially efficient (competitive) quantity. The dimensions indicated in the diagram yield a triangle whose base and height multiply to 112.5 (base being the difference in quantities between Qm and Qc and height coming from the price difference along the demand curve), resulting in DWL = 112.5. The provided numeric match aligns with the standard DWL calculation for the monopoly outcome on this diagram.

Option d) $262.50
This value would correspond to a larger triangular area than what the graph indicates. It ignores the relatively small horizontal distance between the monopoly and competitive quantities or uses a larger price gap than the diagram supports. In short, this DWL overestimates the inefficiency shown by the graph.

In summary, the deadweight loss in a monopoly is the triangular area representing the lost welfare from producing less than the socially efficient quantity, bounded by the demand curve and MC, between the monopoly output and the competitive output. Based on the graph provided, that area equals $112.50, which corresponds to option c.

Refer to the accompanying graph to answer. The supply and demand curves apply to both a monopoly market and a competitive market. The marginal revenue curve applies only to a monopolyWhat would be the deadweight loss in a monopoly market?单项选择题

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