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Unformatted text preview: (Price ATC) * (Quantity) = profit Dead Weight Loss (DWL) : Loss in social surplus due to misallocation of societys resources. Consumer surplus area above the price and below the demand curve Producer surplus area below the price and above the marginal cost, but limited by profit maximizing quantity for monopoly, so stops at Dead Weight Loss To find consumer and producer surplus under perfect competition (PC) and monopoly, you just find the areas of the triangles and find the areas of rectangles and you ADD THEM TOGETHER. Area of triangle = (1/2)*(base)*(height). Collectively, society is worse off when you move from perfect competition to monopoly....
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- Spring '09