Figure 10-10

-Refer to Figure 10-10.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 10-10
 
-Refer to Figure 10-10.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 consumer surplus is reduced by the area representing the difference in price and quantity, which is area P₁P₂EF.

Figure 10-10 -Refer to Figure 10-10.Compared to a Perfectly Competitive Market,consumer Surplus