Figure 11.2.1
-Refer to Figure 11.2.1 above. When the firm charges the reservation price to each consumer, the additional profit equals area:
A) A
B) B
C) C
D) C + D

Question

Figure 11.2.1
-Refer to Figure 11.2.1 above. When the firm charges the reservation price to each consumer, the additional profit equals area:
A) A 
B) B 
C) C 
D) C + D

Quizplus · Accepted Answer

When the firm charges reservation price to each consumer, it earns profit equal to the triangle C + D. This is because the firm incurs a cost equal to area A to produce the good, but when it charges the reservation price to each consumer, it earns the price equal to area C + D. Therefore, the additional profit earned is equal to area C + D.

Figure 11.2.1 -Refer to Figure 11.2.1 Above. When the Firm Charges the Charges