16) The following figure shows the downward sloping demand and marginal revenue [MR] curves and the upward sloping marginal cost [MC] curve of a monopolist. Price A Ma

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Chapter23: Profit Maximization
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16) The following figure shows the downward sloping demand and marginal revenue [MR]
curves and the upward sloping marginal cost [MC] curve of a monopolist.
Price.
V
W
U NA 4
B
A
E
a. area VWE.
b. area HEF.
I
F
N
MR
J K L
MC
Quantity
Comparing the result of perfect competition with that of a perfectly price-discriminating
monopolist, there is an efficiency loss equal to:
Demand
c. area JHFK.
d. zero. There will be no efficiency loss in either case.
Transcribed Image Text:16) The following figure shows the downward sloping demand and marginal revenue [MR] curves and the upward sloping marginal cost [MC] curve of a monopolist. Price. V W U NA 4 B A E a. area VWE. b. area HEF. I F N MR J K L MC Quantity Comparing the result of perfect competition with that of a perfectly price-discriminating monopolist, there is an efficiency loss equal to: Demand c. area JHFK. d. zero. There will be no efficiency loss in either case.
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