12:40a bartleby.comDocument1 Compatibility ModeewAaBbCcD AaBbCcDdE AaBbCcD AaBbCcDdEeAaBbCcDAaBbCcDdEeAaBbCcDdEeНевding 2No SpacingSubtle EmTitleSubtitleNormalHeading 1The accompanying figure shows the demand curve, marginal revenue curve, marginalcost curve and average total cost curve for a monopolist.3028262422201816ATC1412108мс4DMR291067124Quantity (units/day)1) This monopolist maximizes its profit by producingcharging a price ofunits per day andper unit.units per day2) The socially optimal level of output is3) At this monopolist's proflt-maximizing level of output what is its economicprofit or loss?4) At his monopolist's soclally optimal level of output, what is its economic profitor loss?5) At this monopolist's proflt-maximizing level of output what the deadweightloss to society?MOCPrice (S/unit)

Question
Asked Oct 27, 2019
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Can you help me with 4 and 5 

12:40
a bartleby.com
Document1 Compatibility Mode
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AaBbCcD AaBbCcDdE AaBbCcD AaBbCcDdEe
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Невding 2
No Spacing
Subtle Em
Title
Subtitle
Normal
Heading 1
The accompanying figure shows the demand curve, marginal revenue curve, marginal
cost curve and average total cost curve for a monopolist.
30
28
26
24
22
20
18
16
ATC
14
12
10
8
мс
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D
MR
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9
10
6
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Quantity (units/day)
1) This monopolist maximizes its profit by producing
charging a price of
units per day and
per unit.
units per day
2) The socially optimal level of output is
3) At this monopolist's proflt-maximizing level of output what is its economic
profit or loss?
4) At his monopolist's soclally optimal level of output, what is its economic profit
or loss?
5) At this monopolist's proflt-maximizing level of output what the deadweight
loss to society?
MOC
Price (S/unit)
help_outline

Image Transcriptionclose

12:40 a bartleby.com Document1 Compatibility Mode ew AaBbCcD AaBbCcDdE AaBbCcD AaBbCcDdEe AaBbCcD AaBbCcDdEe AaBbCcDdEe Невding 2 No Spacing Subtle Em Title Subtitle Normal Heading 1 The accompanying figure shows the demand curve, marginal revenue curve, marginal cost curve and average total cost curve for a monopolist. 30 28 26 24 22 20 18 16 ATC 14 12 10 8 мс 4 D MR 2 9 10 6 7 1 2 4 Quantity (units/day) 1) This monopolist maximizes its profit by producing charging a price of units per day and per unit. units per day 2) The socially optimal level of output is 3) At this monopolist's proflt-maximizing level of output what is its economic profit or loss? 4) At his monopolist's soclally optimal level of output, what is its economic profit or loss? 5) At this monopolist's proflt-maximizing level of output what the deadweight loss to society? MOC Price (S/unit)

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Expert Answer

Step 1

At socially optimal level, output is produced at a point where price equals marginal cost.

 

Step 2

4)

Since the socially optimal level of output is equal to 8 units/day at price $6/unit equal to marginal cost. And at this level of output, total average cost is equal to $14/unit.

The economic profit can be calculated as follows-

Profit= (P-AC) Q
(S6-S14) 8
= -S8x8
= -$64
The negative sign depicts the loss.
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Profit= (P-AC) Q (S6-S14) 8 = -S8x8 = -$64 The negative sign depicts the loss.

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Step 3

Since, as the average total cost is greater than the price charged per unit. There is economic loss...

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Economic loss at
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socially optimal
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20
output.
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16
АTС
14
12
10
мC
6
4
MR
2
3
10
1
5
Quantity (units/day)
Price ($/unit)
help_outline

Image Transcriptionclose

30 28 26 Economic loss at 24 socially optimal 22 20 output. 18 16 АTС 14 12 10 мC 6 4 MR 2 3 10 1 5 Quantity (units/day) Price ($/unit)

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