Show on the graph in Problem 17 the consumer surplus from newspapers and the deadweight loss created by the monopoly. Explain why this market might encourage rent seeking.

Problem 17

The figure illustrates the situation facing the publisher of the only newspaper containing local news in an isolated community.

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Price and cost (cents per newspaper) 100 80 60 40 20 0 1 100 MC D 200 300 400 500 Quantity (newspapers per day)