Consider a profit-maximizing monopoly pricing under the following conditions. the profit-maximizing quantity is 40 units, the profit-maximizing price is $160, and the marginal cost of the 40th unit is $120. if the good were produced in a perfectly competitive market, the equilibrium quantity would be 50, and the equilibrium price would be $150. the demand curve and marginal cost curves are linear. what is the value of the deadweight loss created by the monopolist?

The dead weight loss will be equal to 200.

Explanation:

Deadweight loss refers to the loss in surplus when the production is not taking place efficiently. A monopolist produces less than socially optimal level of output and charges a higher price. This causes a loss of consumer surplus.  

Dead Weight loss  

= Area of the triangle marked by a difference in Quantity under 2 situations and Price under monopoly and equality point of MR-MC

=

=

=

= 200

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