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Author Question: Refer to Table 15-4. What is the amount of the deadweight loss generated by Shakti when it produces ... (Read 52 times)

awywial

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on: Jun 29, 2018
Refer to Table 15-4. What is the amount of the deadweight loss generated by Shakti when it produces the monopoly output?
 
  A) 124 B) 42 C) 36 D) 12

Question 2

What is meant by excess capacity? How does it relate to consumer utility?
 
  What will be an ideal response?


Sweetkitty24130

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Reply #1 on: Jun 29, 2018
Answer to Question 1

D

Answer to Question 2

Excess capacity refers to a situation where a firm does not produce at the lowest possible average cost. In other words, economies of scale have not been exhausted. Excess capacity is an inevitable consequence of product differentiation. Firms differentiate their products in order to appeal to consumers' varied tastes. Consumers are, therefore, better offthey have greater utilitythan they would be if companies did not differentiate their products. Consumers are willing to pay for the higher costs that result from product differentiation.


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awywial

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Reply #2 on: Jun 29, 2018
Correct answers!


Sweetkitty24130

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Reply #3 on: Jun 29, 2018
Great! Please up vote :D


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