Case 1: Upward slopping MC curve MC(m) Pm= Price charged by the monopolist Qm= Quantity produced under monopoly Qc= Quantity produced under perfect competition MC(m)= MC for the monopolistâž” MC@ Qm CS(under monopoly)= area under the demand curve, above the price (Pm) to the left of quantity supplied (Qm). PS(under monopoly)= area above the supply curve( MC curve), under the price (Pm) to the left of the quantity supplied (Qm). DWL caused by the monopoly= area between Qc and Qm, under the demand curve and above the Supply curve (MC curve). Dead weight loss caused by the monopoly = [(Pm-MC(m))* (Qc-Qm)]*1/2 Case 2: Flat MC curve In this case, since the MC curve is a horizontal line, the MC(m) is equal to the Price charged under perfect competition. CS(under monopoly)= red area PS(under monopoly= blue area DWL caused by the monopoly= orange area
