Suppose a Monopoly Firm Has an Annual Demand Function of Q^d

question 24

Multiple Choice

Suppose a monopoly firm has an annual demand function of Q^d = 20,000 - 250P,annual variable costs of VC = 16Q + 0.002Q² and marginal cost of MC = 16 + 0.004Q,where Q is the annual quantity of output.In addition,the firm has an avoidable fixed cost of $25,000 per year.If this firm maximizes its profit,what is the value of the deadweight loss caused by this monopoly?

• A) $242,000
• B) $55,250
• C) $30,250
• D) $5,250

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