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Suppose a profit-maximizing monopolist faces a constant marginal cost of $10, produces an output level of 100 units, and charges a price of $50. The socially efficient level of output is 200 units. Assume that the demand curve and marginal revenue curve are the typical downward-sloping straight lines. The monopoly deadweight loss equals $4,000. a. True b. False

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Tundexi

Answer:

b. False

Explanation:

Deadweight loss = (1/2) * (Monopoly P - MC) * (Difference in Q)

Deadweight loss = (1/2) * ($50 - $10) * (200 - 100)

Deadweight loss = (1/2) * $40 * 100 units

Deadweight loss = $2,000

The given statement is false.

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