Figure 16-6

Watanabe Sensei operates the only martial arts school in Hartfield. For simplicity, assume that consumers have identical demand curves and that Sensei knows what this demand curve is. Figure 16-6 shows this demand curve.
-Refer to Figure 16-6.With a two-part pricing scheme-a monopoly price for classes and a one-time membership fee-what is the amount of producer surplus Sensei will earn?
A)an amount equal to the area A + B + C + D
B)an amount equal to the area E + F
C)an amount equal to the area A + C + H
D)an amount equal to the area A + B + C + D + H + G

Question

Figure 16-6
  
Watanabe Sensei operates the only martial arts school in Hartfield. For simplicity, assume that consumers have identical demand curves and that Sensei knows what this demand curve is. Figure 16-6 shows this demand curve.
-Refer to Figure 16-6.With a two-part pricing scheme-a monopoly price for classes and a one-time membership fee-what is the amount of producer surplus Sensei will earn?
A)an amount equal to the area A + B + C + D 
B)an amount equal to the area E + F 
C)an amount equal to the area A + C + H 
D)an amount equal to the area A + B + C + D + H + G

Quizplus · Accepted Answer

In a two-part pricing scheme, the producer surplus is the sum of the monopoly profit from the per-unit price and the membership fee, which covers the entire consumer surplus. This is represented by the area A + B + C + D + H + G.

Figure 16-6 Watanabe Sensei Operates the Only Martial Arts School in Hartfield