Question

Chapter 14 #4. Draw the demand, marginal-revenue, average-total-cost, and marginal-cost curves for a monopolist. Show the profit-maximizing level of output, the profit-maximizing price, and the amount of profit. Figure 5. The Monopolist's Profit Costs and Revenue Monopoly price Monopoly profit Average total cost Marginal cost Average total cost Demand Marginal revenue 0 Qmax Quantity Details The area of the box BCDE equals the profit of the monopoly firm. The height of the box (BC) is price minus average total cost, which equals profit per unit sold. The width of the box (DC) is the number of units sold. #5. In your diagram from the previous question, show the level of output that maximizes total surplus. Show the deadweight loss from the monopoly. Explain your answer.

          Chapter 14
#4. Draw the demand, marginal-revenue, average-total-cost, and marginal-cost curves for a
monopolist. Show the profit-maximizing level of output, the profit-maximizing price, and the amount
of profit.
Figure 5. The Monopolist's Profit
Costs and
Revenue
Monopoly
price
Monopoly
profit
Average
total
cost
Marginal cost
Average total cost
Demand
Marginal revenue
0
Qmax
Quantity
Details
The area of the box BCDE equals the profit of the monopoly firm. The height of the box (BC) is price
minus average total cost, which equals profit per unit sold. The width of the box (DC) is the number
of units sold.
#5. In your diagram from the previous question, show the level of output that maximizes total surplus.
Show the deadweight loss from the monopoly. Explain your answer.

Chapter 14
#4. Draw the demand, marginal-revenue, average-total-cost, and marginal-cost curves for a
monopolist. Show the profit-maximizing level of output, the profit-maximizing price, and the amount
of profit.
Figure 5. The Monopolist's Profit
Costs and
Revenue
Monopoly
price
Monopoly
profit
Average
total
cost
Marginal cost
Average total cost
Demand
Marginal revenue
0
Qmax
Quantity
Details
The area of the box BCDE equals the profit of the monopoly firm. The height of the box (BC) is price
minus average total cost, which equals profit per unit sold. The width of the box (DC) is the number
of units sold.
#5. In your diagram from the previous question, show the level of output that maximizes total surplus.
Show the deadweight loss from the monopoly. Explain your answer.

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