The accompanying figure shows the demand curve, marginal revenue curve, marginal cost curve and average total cost curve for a monopolist. At this monopolist's profit-maximizing level of output, the deadweight loss to society equals:
A)$0 per day.
B)$16 per day.
C)$24 per day.
D)$64 per day.

Question

The accompanying figure shows the demand curve, marginal revenue curve, marginal cost curve and average total cost curve for a monopolist.  At this monopolist's profit-maximizing level of output, the deadweight loss to society equals:
A)$0 per day. 
B)$16 per day. 
C)$24 per day. 
D)$64 per day.

Quizplus · Accepted Answer

Deadweight loss is given by the area of the triangular region to the right of the monopolist's profit-maximizing level of output (4 units), below the demand curve and above marginal cost: ½ × $12 × 4 = $24.

The Accompanying Figure Shows the Demand Curve, Marginal Revenue Curve