Assume initially that there is no positive externality associated with the good supplied by the monopoly firm.
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Assume initially that there is no positive externality associated with the good supplied by the monopoly firm. Depict on a graph the deadweight loss arising from such a monopoly. Now imagine instead that consumption of the good benefits even those who do not consume the good - that is, consumption of the good leads to a positive externality. Show whether the presence of this positive externality leads to a change in the initial deadweight loss. Conclude by providing clear intuition (i.e., without referring to technical features from the graph) as to why this difference arises.
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