Figure 7.3

-Refer to Figure 7.3. When the monopoly firm raises the price from P_fe to P_m, the consumer surplus that is transferred to the monopolist is

Question

Figure 7.3 -Refer to Figure 7.3. When the monopoly firm raises the price from P_fe to P_m, the consumer surplus that is transferred to the monopolist is

Quizplus · Accepted Answer

The consumer surplus that is transferred to the monopolist can be calculated by finding the area between the demand curve and the price line for both prices (P_fe and P_m) and subtracting the consumer surplus at the initial price from the consumer surplus at the higher price. This gives us: Consumer surplus transferred to monopolist = (P_m - P_fe) x EC Therefore, the correct answer is D.

Figure 7.3 -Refer to Figure 7.3. When the Monopoly Firm Raises the Monopoly