The following figure shows the revenue curves of a monopolist: Figure 10.6
D: Average revenue
MR: Marginal revenue
-Refer to Figure 10.6.Assume that marginal costs are constant at $2,500 and fixed costs are zero.Under a monopoly,consumer surplus would be:
A)$100,000.
B)$500,000.
C)$300,000.
D)$250,000.
E)$200,000.

Question

The following figure shows the revenue curves of a monopolist: Figure 10.6  
D: Average revenue
MR: Marginal revenue
-Refer to Figure 10.6.Assume that marginal costs are constant at $2,500 and fixed costs are zero.Under a monopoly,consumer surplus would be:
A)$100,000. 
B)$500,000. 
C)$300,000. 
D)$250,000. 
E)$200,000.

Quizplus · Accepted Answer

Consumer surplus is the area below the demand curve and above the price line. In this case, the demand curve is linear and the price line is horizontal at $5,000. The area of the triangle formed by these two lines is $100,000.

The Following Figure Shows the Revenue Curves of a Monopolist