The diagram below shows the market demand curve and the cost curves for a single firm. FIGURE 12-6
-Refer to Figure 12-6. Suppose this firm is a government-owned natural monopoly and imposes a price so as to achieve allocative efficiency in this market. The amount of tax revenue that the government must raise elsewhere in the economy to offset the losses of this firm is represented by the area
A) P1P3ae
B) P1P2bc
C) 0P2bQ₂
D) edbc
E) Q₁dbQ₂

Question

The diagram below shows the market demand curve and the cost curves for a single firm.  FIGURE 12-6
-Refer to Figure 12-6. Suppose this firm is a government-owned natural monopoly and imposes a price so as to achieve allocative efficiency in this market. The amount of tax revenue that the government must raise elsewhere in the economy to offset the losses of this firm is represented by the area
A) P1P3ae 
B) P1P2bc 
C) 0P2bQ₂ 
D) edbc 
E) Q₁dbQ₂

Quizplus · Accepted Answer

The Answer of The diagram below shows the market demand curve and the cost curves for a single firm.  FIGURE 12-6
-Refer to Figure 12-6. Suppose this firm is a government-owned natural monopoly and imposes a price so as to achieve allocative efficiency in this market. The amount of tax revenue that the government must raise elsewhere in the economy to offset the losses of this firm is represented by the area
A) P1P3ae 
B) P1P2bc 
C) 0P2bQ₂ 
D) edbc 
E) Q₁dbQ₂

The Diagram Below Shows the Market Demand Curve and the Cost