A Firm with Market Power Has an Inverse Demand Curve

question 34

Multiple Choice

A firm with market power has an inverse demand curve of P = 450 - 5Q and marginal cost of MC = 40Q, where Q is measured in thousands. What is the deadweight loss from market power at the firm's profit-maximizing output level?

• A) $15,000
• B) $280,000
• C) $22,500
• D) $9,400

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