2. The following figure represents a perfectly competitive industry that is taken over by a single firm and operated as a monopoly. Price (dollars per unit) 3⁰ P₂ 5 0 Q₁ MR Q₂ 1 MC (a) What was the competitive price and quantity? (b) What is the monopoly price and quantity? D Quantity (units per hour) (c) What area represents consumer surplus under perfect competition? (d) What area represents consumer surplus under monopoly? (e) What area represents the deadweight loss of monopoly?
2. The following figure represents a perfectly competitive industry that is taken over by a single firm and operated as a monopoly. Price (dollars per unit) 3⁰ P₂ 5 0 Q₁ MR Q₂ 1 MC (a) What was the competitive price and quantity? (b) What is the monopoly price and quantity? D Quantity (units per hour) (c) What area represents consumer surplus under perfect competition? (d) What area represents consumer surplus under monopoly? (e) What area represents the deadweight loss of monopoly?
Chapter9: Monopoly
Section: Chapter Questions
Problem 4.5P
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