Use the figure below to answer the following questions.

Figure 13.3.3
-Consider the revenue and cost curves in Figure 13.3.3. If this is a single-price monopoly, what area is producer surplus?
A)IHD
B)KHD
C)KEA
D)IEAC
E)None of the above

Question

Use the figure below to answer the following questions.
  
Figure 13.3.3
-Consider the revenue and cost curves in Figure 13.3.3. If this is a single-price monopoly, what area is producer surplus?
A)IHD 
B)KHD 
C)KEA 
D)IEAC 
E)None of the above

Quizplus · Accepted Answer

Producer surplus is the area between the price and the marginal cost curve up to the quantity the monopolist chooses to produce. In this case, the monopolist chooses to produce where marginal revenue equals marginal cost (point E). Therefore, the producer surplus is the area IEAC.

Use the Figure Below to Answer the Following Questions