Figure 9.9 Figure 9.9 shows the demand and cost curves for a monopolist.
-Refer to Figure 9.9.The difference between the monopoly's price and the perfectly competitive industry's price is
A)The monopoly's price is higher by $9.50.
B)The monopoly's price is higher by $13.
C)The monopoly's price is higher by $3.50.
D)The monopoly's price is higher by $21.

Question

Figure 9.9  Figure 9.9 shows the demand and cost curves for a monopolist.
-Refer to Figure 9.9.The difference between the monopoly's price and the perfectly competitive industry's price is
A)The monopoly's price is higher by $9.50. 
B)The monopoly's price is higher by $13. 
C)The monopoly's price is higher by $3.50. 
D)The monopoly's price is higher by $21.

Quizplus · Accepted Answer

The difference between the monopoly's price and the perfectly competitive industry's price is the vertical distance between the demand curve and the marginal cost curve at the quantity produced under each market structure. In this case, the monopoly's price is $15 and the perfectly competitive industry's price is $2.50. Therefore, the difference is $15 - $2.50 = $12.50.

Figure 99 Figure 9