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
-Refer to Figure 15-2.Since there is a positive deadweight loss from monopoly,which of the following statements must be true?
A)The gain in producer surplus should not exceed $450.
B)The loss in total surplus should be lesser than or equal to $300.
C)The loss in consumer surplus should not exceed $600.
D)The gain in total surplus should exceed the loss in consumer surplus.

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 
-Refer to Figure 15-2.Since there is a positive deadweight loss from monopoly,which of the following statements must be true?
A)The gain in producer surplus should not exceed $450. 
B)The loss in total surplus should be lesser than or equal to $300. 
C)The loss in consumer surplus should not exceed $600. 
D)The gain in total surplus should exceed the loss in consumer surplus.

Quizplus · Accepted Answer

The gain in producer surplus is $450, so the loss in total surplus must be greater than $450.

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