How much is surplus is lost when there is a monopoly

Reference no: EM13199545

The following questions refer to the accompanying market diagram. PC and QC are the equilibrium price and quantity if the firm behaves competitively, and PM and QM are the equilibrium price and quantity if the firm is a simple monopoly.

(a) What area represents the producer's surplus earned in the monopoly equilibrium?
(b) Suppose this firm initially acted competitively. If the firm switched to the monopoly equilibrium, how much deadweight loss would be created?
(c) What is the difference between producer's surplus as a monopolist and producer's surplus when setting price at what would exist in a competitive market?
(d) Relative to the surplus they would receive in a competitive market, consumers lose how much surplus because there is a monopoly?
(e) Of the surplus that consumers lose because there is a monopoly (and not perfect competition), how much is lost to the monopoly itself?
(f) Of the surplus that the consumers lose because there is a monopoly (and not perfect competition), how much has become deadweight loss?
(g) Relative to the surplus achieved under perfect competition, how much is surplus is lost (deadweight loss) when there is a monopoly?

Reference no: EM13199545

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