Figure: Regulated vs Unregulated Monopolist Reference: Ref 13-6 (Figure: Regulated vs Unregulated Monopolist) Refer to the figure. Calculate the change in consumer surplus from an unregulated monopoly to a regulated monopoly.
A) $6,400
B) $2,800
C) $400
D) $3,600

Question

Figure: Regulated vs Unregulated Monopolist  Reference: Ref 13-6 (Figure: Regulated vs Unregulated Monopolist) Refer to the figure. Calculate the change in consumer surplus from an unregulated monopoly to a regulated monopoly.
A) $6,400 
B) $2,800 
C) $400 
D) $3,600

Quizplus · Accepted Answer

The change in consumer surplus is the area of the triangle formed by the difference between the original price (P1) and the new regulated price (P2) and the quantity demanded at P2. This is calculated as:
(1/2) x (Q2-Q1) x (P1-P2)
= (1/2) x (40-20) x (40-32)
= $2,800. Therefore, the correct answer is B.

Figure: Regulated Vs Unregulated Monopolist Reference: Ref 13-6 (Figure