How big is the deadweight loss of monopoly

Reference no: EM131335906

Consider the market for Pop Rocks depicted in the diagram below:

a. If the Pop Rock industry were competitive, what would the competitive price and quantity be?

b. If the Pop Rock industry were competitive, what would be the consumer and producer surpluses, respectively?

c. Suppose that gangland figure Tommy Vercetti monopolizes the Pop Rock market. What price and quantity will he choose to maximize profit?

d. Calculate the consumer and producer surplus of this Pop Rock monopoly.

e. Compare your answers to (d) and (b). How big is the deadweight loss of monopoly?

Reference no: EM131335906

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