Sub: Economics Topic: Micro Economics
Question:
graphical illustration of a dead weight loss of a monopolist
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Illustrate in the graph below the deadweight loss (DWL) that would result if this monopolist
were allowed to operate as a profit maximizing firm without regulations. If regulated, the
monopolist has to behave like a competitive firm.
I already drew the demand curve and labeled it as D.
• Draw the marginal cost curve and label it as MC.
• Draw the marginal revenue curve and label it as MR.
• Locate the price and quantity the monopolist will set WITHOUT regulation and label it as Pm
and Qm.
• Locate the price and quantity the monopolist will set UNDER regulation and label it as Pc and
Qc.
• Shade the area that represents DWL.
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Sub: Economics Topic: Micro Economics
Solution:
Illustrate in the graph below the deadweight loss (DWL) that would result if this
monopolist were allowed to operate as a profit maximizing firm without regulation. If
regulated,
the monopolist has to behave like a competitive firm.
I already drew the demand curve and labeled it as D.
í¯€Draw the marginal cost curve and label it as MC.
í¯€Draw the marginal revenue curve and label it as MR.
í¯€Locate the price and quantity the monopolist will set WITHOUT regulation and label it as Pm
and Qm.
í¯€Locate the price and quantity the monopolist will set UNDER regulation and label it as Pc and
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*The Homework solutions from ClassOf1 are intended to help the student understand the approach to solving the problem and not for submitting the same in
lieu of your academic submissions for grades.

Sub: Economics Topic: Micro Economics
Qc.
í¯€Shade the area that represents DWL.
The following curves we have to draw:
Q d =280- 2P
2P= 280-Q
P= 140- 0.5Q
MC=∂TC/∂Q =20 + Q
MR ==∂TR/∂Q =140 – Q
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*The Homework solutions from ClassOf1 are intended to help the student understand the approach to solving the problem and not for submitting the same in
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Sub: Economics Topic: Micro Economics
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Finance, Marketing, Statistics, Economics and others. Check out more solved problems in our Solution Library.
www.classof1.com
*The Homework solutions from ClassOf1 are intended to help the student understand the approach to solving the problem and not for submitting the same in
lieu of your academic submissions for grades.