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-(Table: Prices and Demand) Look at the table Prices and Demand. The New Orleans Saints have a monopoly on Saints logo hats. The marginal cost of producing a hat is $18. The Saints sell at most one hat to each customer, and the table shows each customer's willingness to pay. If the Saints were a perfectly competitive firm in a perfectly competitive industry, at their profit-maximizing price and output total surplus would be _____. If the Saints were a profit-maximizing monopoly, at their profit-maximizing price and output total surplus would be _____.
A) $0; $0
B) $27; $36
C) $36; $27
D) $18; $27

Question

Use the following to answer questions: 
-(Table: Prices and Demand) Look at the table Prices and Demand. The New Orleans Saints have a monopoly on Saints logo hats. The marginal cost of producing a hat is $18. The Saints sell at most one hat to each customer, and the table shows each customer's willingness to pay. If the Saints were a perfectly competitive firm in a perfectly competitive industry, at their profit-maximizing price and output total surplus would be _____. If the Saints were a profit-maximizing monopoly, at their profit-maximizing price and output total surplus would be _____.
A) $0; $0 
B) $27; $36 
C) $36; $27 
D) $18; $27

Quizplus · Accepted Answer

In perfect competition, price equals marginal cost, so total surplus is maximized at $36. As a monopoly, the Saints maximize profit by setting a higher price, reducing total surplus to $27.

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