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Intermediate Microeconomics and Its Application 12th Edition by Walter Nicholson,Christopher Snyder
Edition 12ISBN: 978-1133189022Intermediate Microeconomics and Its Application 12th Edition by Walter Nicholson,Christopher Snyder
Edition 12ISBN: 978-1133189022 Exercise 24
Figure illustrates the ''deadweight loss'' from the monopolization of a market. What is this a loss of?
FIGURE Allocational and Distributional Effects of Monopoly
A perfectly competitive industry would produce output level Q* at a price of P*. A monopolist would opt for Q** at a price of P**. Consumer expenditures and productive inputs worth AEQ*Q** are reallocated into the production of other goods. Consumer surplus equal to P**BAP* is transferred into monopoly profits. There is a deadweight loss given by BEA.
FIGURE Allocational and Distributional Effects of Monopoly
A perfectly competitive industry would produce output level Q* at a price of P*. A monopolist would opt for Q** at a price of P**. Consumer expenditures and productive inputs worth AEQ*Q** are reallocated into the production of other goods. Consumer surplus equal to P**BAP* is transferred into monopoly profits. There is a deadweight loss given by BEA.
Explanation
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In economics, a deadweight loss is a los...
Intermediate Microeconomics and Its Application 12th Edition by Walter Nicholson,Christopher Snyder
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