Figure 15-15

-Refer to Figure 15-15.If the monopoly firm is not allowed to price discriminate,then consumer surplus amounts to
A) $0.
B) $500.
C) $1,000.
D) $2,000.

Question

Figure 15-15
 
-Refer to Figure 15-15.If the monopoly firm is not allowed to price discriminate,then consumer surplus amounts to
A) $0. 
B) $500. 
C) $1,000. 
D) $2,000.

Quizplus · Accepted Answer

Consumer surplus is the area between the demand curve and the price line. In this case, without price discrimination, the firm charges the same price to all consumers, which is $10. The demand curve intersects the price line at a quantity of 100 units. Thus, consumer surplus is the area of the triangle with base 100 and height $10, which amounts to $(1/2)(100)(10) = $500. Therefore, Choice B is incorrect, and the correct choice is C, which is $1,000.

Figure 15-15 -Refer to Figure 15-15.If the Monopoly Firm Is Not Allowed