![]() Top left: ( Q m, P m ), which is (20, 100) So, first, we need to find the competitive market equilibrium:Īt the competitive market equilibrium: demand = supply The dead-weight loss is the triangle between the demand and supply curves (competitive market equilibrium) and the vertical line Qm. Note that coordinate of bottom right corner of the trapezoid (MR and supply curve intersection) can be found by plugging the Qm in the supply curve, P b = 20 + 2*Q m = 20 + 2*20 = 60 Producer surplus equals the area of the under the monopoly price ( P m ) and above the supply curve (red area), which equals the area of the trapezoid.Ĭoordinates of four corners of this trapezoid are:īottom left: (0, supply curve intercept) = (0, 20)īottom right: ( Q m, P b ) = ( 20, 60 ) Right corner: ( Q m, P m ) = ( 20, 100 ) Top left: (0, demand curve intercept) = (0, 140) Consumer surplus equals the area of the under the demand curve and monopoly price ( P m ), horizontal line.Ĭoordinates of three corners of this triangle will be: MC is the supply function, and we learned that if demand curve is given as P = a − b Q, then M R = a − 2 b Q To do so, first, we have to solve the MR = MC for the Q. In order to answer this question, first, we need to find the monopoly equilibrium.
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