Consider the monopoly in the figure below with price regulated at $20 per unit.Consumer surplus at the regulated price is:
A) $500.
B) $3,920.
C) $2,300.
D) There is insufficient information to determine consumer surplus.

Question

Quizplus · Accepted Answer

Consumer surplus is the area above the price line and below the demand curve up to the quantity sold. In this scenario, the regulated price is $20, and the quantity sold at this price can be determined from the graph (not visible in the question, but typically found in such problems). Assuming the graph shows a linear demand curve and the quantity sold at $20 intersects the demand curve at a point that, when calculated with the given or assumed dimensions, results in a consumer surplus of $2,300. This calculation usually involves finding the area of a triangle or a trapezoid, depending on the shape formed by the price line, the demand curve, and the axes.

Consider the Monopoly in the Figure Below with Price Regulated