The following figure depicts the downward-sloping market demand (D)curve for a five-day western Caribbean cruise on Carnival Cruise Lines.The price (P)is per person in U.S.dollars,and the quantity (Q)is the number of passenger tickets sold.This figure also shows the company's relevant marginal revenue (MR)curve and marginal cost (MC)curve.Use this figure to answer the following questions:

-If this cruise line is a monopoly that charges a single price of $600 per passenger,what is the amount of consumer surplus?
A) $400,000
B) $600,000
C) $800,000
D) $1.2 million
E) $1.6 million

Question

The following figure depicts the downward-sloping market demand (D)curve for a five-day western Caribbean cruise on Carnival Cruise Lines.The price (P)is per person in U.S.dollars,and the quantity (Q)is the number of passenger tickets sold.This figure also shows the company's relevant marginal revenue (MR)curve and marginal cost (MC)curve.Use this figure to answer the following questions:
 
-If this cruise line is a monopoly that charges a single price of $600 per passenger,what is the amount of consumer surplus?
A) $400,000 
B) $600,000 
C) $800,000 
D) $1.2 million 
E) $1.6 million

Quizplus · Accepted Answer

Consumer surplus is the difference between the price consumers are willing to pay for a good and the price they actually pay. In this case, the price consumers are willing to pay is given by the demand curve, which is downward sloping. The price they actually pay is $600. The difference between these two prices is the consumer surplus.To calculate the consumer surplus, we need to find the area below the demand curve and above the price line. This area is a triangle with a base of 1,000 (the number of passengers) and a height of $200 (the difference between the price consumers are willing to pay and the price they actually pay). The area of a triangle is given by the formula (1/2) * base * height. So, the consumer surplus is (1/2) * 1,000 * $200 = $100,000.

The Following Figure Depicts the Downward-Sloping Market Demand (D)curve for a Five-Day