Figure 11.3 illustrates the ‘‘deadweight loss’’ from the monopolization of a market. What is this a loss of? Suppose that the government instituted a per-unit tax on the output of a monopoly firm....

Figure 11.3 illustrates the ‘‘deadweight loss’’ from

the monopolization of a market. What is this a

loss of?

Suppose that the government instituted a per-unit

tax on the output of a monopoly firm. How would

you graph this situation? What would happen

to the market equilibrium after implementation

of such a tax? How would you analyze the tax

incidence question—that is, how would you show

which economic actor pays most of the tax?