Exhibit 9.7

-Refer to Exhibit 9.7,which shows the cost and revenue curves for a monopolist that does not practice price discrimination.The consumer surplus at the profit-maximizing level of output is _____
A)represented by the area under the demand curve and above the price line corresponding to $136.
B)represented by the area under the demand curve and above the line corresponding to an average total cost of $110.
C)represented by the area under the marginal revenue curve and the line corresponding to a marginal revenue of $60.
D)$0.
E)equal to total consumer expenditure.

Question

Exhibit 9.7
 
-Refer to Exhibit 9.7,which shows the cost and revenue curves for a monopolist that does not practice price discrimination.The consumer surplus at the profit-maximizing level of output is _____
A)represented by the area under the demand curve and above the price line corresponding to $136. 
B)represented by the area under the demand curve and above the line corresponding to an average total cost of $110. 
C)represented by the area under the marginal revenue curve and the line corresponding to a marginal revenue of $60. 
D)$0. 
E)equal to total consumer expenditure.

Quizplus · Accepted Answer

Consumer surplus is represented by the area under the demand curve and above the price line. At the profit-maximizing level of output, the price is $136, so the consumer surplus is represented by the area under the demand curve and above the line corresponding to a price of $136.

Exhibit 9.7 -Refer to Exhibit 9.7,which Shows the Cost and Revenue Curves