Use the figure below to answer the following questions. Figure 12.3.3
-Consider Figure 12.3.3.What is the redistribution of surplus from consumers to the producer with a single-price monopoly,as compared to a perfectly competitive market?
A)EADH
B)EABH
C)ABD
D)ACD
E)EABH - BCD

Question

Use the figure below to answer the following questions.  Figure 12.3.3
-Consider Figure 12.3.3.What is the redistribution of surplus from consumers to the producer with a single-price monopoly,as compared to a perfectly competitive market?
A)EADH 
B)EABH 
C)ABD 
D)ACD 
E)EABH - BCD

Quizplus · Accepted Answer

In a perfectly competitive market, the equilibrium quantity and price would be at point E where the demand and supply curves intersect. The consumer surplus would be AED and the producer surplus would be FHE.

In a single-price monopoly, the monopoly would restrict output to achieve monopoly pricing. The equilibrium quantity and price would be at point H. The consumer surplus would decrease to AEB and the producer surplus would increase to CHB. The new area of producer surplus is represented by the triangle EBC.

Therefore, the redistribution of surplus from consumers to the producer with a single-price monopoly compared to a perfectly competitive market is represented by the area EABH (consumer surplus decreases by AED-AEB and producer surplus increases by EBC, which is the deadweight loss or efficiency loss).

Use the Figure Below to Answer the Following Questions