The figure given below shows the cost and revenue curves of a monopolist. Figure 10.9 D: Average revenue
MR: Marginal revenue
ATC: Average total cost
MC: Marginal cost
-Refer to Figure 10.9.Suppose that the market is perfectly competitive.The consumer surplus would be represented by the area _____.
A)JNM
B)0JNV
C)HMQ
D)0HQX
E)JHQN

Question

The figure given below shows the cost and revenue curves of a monopolist. Figure 10.9  D: Average revenue
MR: Marginal revenue
ATC: Average total cost
MC: Marginal cost
-Refer to Figure 10.9.Suppose that the market is perfectly competitive.The consumer surplus would be represented by the area _____.
A)JNM 
B)0JNV 
C)HMQ 
D)0HQX 
E)JHQN

Quizplus · Accepted Answer

In a perfectly competitive market, the price is equal to the marginal cost (P=MC) and firms produce where MC=ATC. In this case, that point is at Q units of output. 
The consumer surplus is represented by the area above the price line (D) and below the demand curve (which is also the marginal revenue curve in perfect competition) up to the quantity Q. 
Therefore, the area represented by HMQ is the consumer surplus in a perfectly competitive market.

The Figure Given Below Shows the Cost and Revenue Curves