The following figure shows the marginal revenue curve [MR],the demand curve,and the marginal cost curve [MC] for a monopolist with constant costs.
Figure 15-2
-Based on Figure 15-2,it can be concluded that the change in consumer surplus due to the shift from perfect competition to monopoly is _____.
A)$150
B)-$300
C)-$450
D)$600

Question

The following figure shows the marginal revenue curve [MR],the demand curve,and the marginal cost curve [MC] for a monopolist with constant costs.
Figure 15-2 
-Based on Figure 15-2,it can be concluded that the change in consumer surplus due to the shift from perfect competition to monopoly is _____.
A)$150 
B)-$300 
C)-$450 
D)$600

Quizplus · Accepted Answer

The change in consumer surplus due to the shift from perfect competition to monopoly equals the area of the triangle formed by the difference between the demand curve and the marginal revenue curve (which gives the monopoly price) and the quantity sold, multiplied by 1/2. 
In this case, the triangle formed is the one below the demand curve, above the marginal revenue curve, and to the right of the point where marginal cost intersects with marginal revenue. Using the midpoint between Q=10 and Q=20 on the horizontal axis as a reference, we can see that the height of the triangle is $30-$20=$10, and the base is 15-5=10. Therefore, the area of the triangle equals (10 x 10)/2, or $50. Since the monopolist captures all of this profit (there is no deadweight loss in this case), the change in consumer surplus is equal to the negative of the profit, or -$50 times the quantity sold, which is 9 units (where MR=MC). Therefore, the total change in consumer surplus due to the shift from perfect competition to monopoly is -$450.

The Following Figure Shows the Marginal Revenue Curve [MR],the Demand