Re: Micro doubt

Posted by Rajat on Feb 09, 2015; 10:16am
URL: http://discussion-forum.276.s1.nabble.com/Micro-doubt-tp7595803p7595809.html



the horizontal line passing through B and A is the MC curve.
Let
A be (Y2,P2)
B be (Y1,P2)
C be (Y1,P1)

the two slanting lines are the demand curve and MR curve. MR curve is twice as steep as the demand.
DW loss will be given by area of the  triangle ABC.
P1 = 2P2
Y2 = 2Y1

Using this relation, we can compute the area. Hope this helps