Refer to Figure 15-13. From the monopoly graph above, identify the area representing the deadweight loss

Would the deadweight loss be larger if the demand curve was more elastic or less elastic?

What will be an ideal response?


The deadweight loss = area C + D. The less elastic is the demand curve, the greater market power the firm has, the bigger is the difference between the marginal benefit (which equals the price) and marginal cost of the last unit produced and greater is the deadweight loss due to the monopoly.

Economics

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Why should the GDP accounts matter to the average citizen?

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Economics