The following figure shows the revenue curves of a monopolist:
Figure 11.6
D: Average revenue
MR: Marginal revenue
-Refer to Figure 11.6. 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 11.6
  D: Average revenue
MR: Marginal revenue
-Refer to Figure 11.6. 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 above the price level and below the demand curve up to the quantity sold. Under monopoly conditions, the price is higher and quantity lower than in a competitive market. Given the constant marginal cost of $2,500, the monopoly would set a price where marginal cost equals marginal revenue, not shown directly in the question but implied by the setup. Without the specific demand curve, price, or quantity details provided in the question, we can't calculate the exact area representing consumer surplus. However, assuming the correct answer is based on information typically provided in such a scenario, choice A would be selected as a placeholder for the correct answer in the context of this question's format.

The Following Figure Shows the Revenue Curves of a Monopolist