Graphical description of dead weight loss of monopolist

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Reference no: EM1315300

Illustrate in the graph below the deadweight loss (DWL) that would result if this monopolist were allowed to operate as a profit maximizing firm without regulation. If regulated, the monopolist has to behave like a competitive firm.

I already drew the demand curve and labelled it D.

Draw the marginal cost curve and label it as MC.
Locate the price and quantity the monopolist will set WITHOUT regulation and label it as Pm and Qm.
Locate the price and quantity the monopolist will set UNDER regulation and label it as Pc and Qc.

Shade the area that represents DWL.

Reference no: EM1315300

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