Figure 15-10

-Refer to Figure 15-10.Compared to a perfectly competitive market, consumer surplus is lower in a monopoly by an amount equal to the
A)area FHE.
B)area FGE.
C)area P₁P₂EF.
D)area P₁P₂GF.

Question

Figure 15-10
 
-Refer to Figure 15-10.Compared to a perfectly competitive market, consumer surplus is lower in a monopoly by an amount equal to the
A)area FHE. 
B)area FGE. 
C)area P₁P₂EF. 
D)area P₁P₂GF.

Quizplus · Accepted Answer

In a monopoly, the price is higher and the quantity is lower compared to a perfectly competitive market. The reduction in consumer surplus is represented by the area between the monopoly price and the competitive price over the quantity sold, which is area P₁P₂EF.

Figure 15-10 -Refer to Figure 15-10.Compared to a Perfectly Competitive Market, Consumer