Figure 10-10

-Refer to Figure 10-10.What is the area that represents consumer surplus under a monopoly?

Question

Figure 10-10
 
-Refer to Figure 10-10.What is the area that represents consumer surplus under a monopoly?

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 a monopoly, the price is set above the marginal cost, so consumers are willing to pay more for the good than the monopoly charges. The area that represents consumer surplus is the triangle P₀P₁F, which is the difference between the price consumers are willing to pay (P₀) and the price they actually pay (P₁).

Figure 10-10 -Refer to Figure 10-10.What Is the Area That Represents Consumer