Figure 7.2

-Refer to Figure 7.2. If industry is just one firm, then the area ____ represents the consumer surplus that is transferred to the one firm when it raises its price.

Question

Figure 7.2
 
-Refer to Figure 7.2. If industry is just one firm, then the area ____ represents the consumer surplus that is transferred to the one firm when it raises its price.

Quizplus · Accepted Answer

The area described represents the consumer surplus that is transferred to the firm as producer surplus when the firm, acting as a monopoly, raises its price above the competitive level. This area is typically between the initial and new price levels, under the demand curve, and above the new price.

Figure 7.2 -Refer to Figure 7.2. If Industry Is Just One Firm