Business, 18.04.2020 00:01 evanwall91

Consider the accompanying demand schedule for diamonds. The marginal cost of producing diamonds is constant at $100. There is no fixed cost.

Price of Demand Quantity of diamonds demanded
$500 0
400 1
300 2
200 3
100 4
0 5

a. If De Beers charges $300 for a diamond, calculate total consumer surplus by summing individual consumer surpluses. How large is producer surplus?
b. What is the perfectly competitive price? What quantity will be sold in this perfectly competitive market?
c. At the competitive price and quantity. how large is total consumer surplus? How large is producer surplus?
d. Compare your answer to part c to your answer to part a. How large is the deadweight loss associated with monopoly in this case?

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Consider the accompanying demand schedule for diamonds. The marginal cost of producing diamonds is c...

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