Question

illustrate the deadweight loss under monopoly. does it exist in case of perfect competition as well​

Answer 1

Answer:

The producer surplus is now the red area, which is the quantity above the marginal cost curve (also supply curve), below the monopolist price, and left of the monopolist quantity. When a market does not produce at its efficient point there is a deadweight loss to society.

The monopolist restricts output to Qm and raises the price to Pm. Reorganizing a perfectly competitive industry as a monopoly results in a deadweight loss to society given by the shaded area GRC. ... The monopoly firm faces the same market demand curve, from which it derives its marginal revenue curve.

Explanation:

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