The figure given below shows the cost and revenue curves of a monopolist.Figure 11.9
D: Average revenue
MR: Marginal revenue
ATC: Average total cost
MC: Marginal cost
-Refer to Figure 11.9. 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 11.9
  D: Average revenue
MR: Marginal revenue
ATC: Average total cost
MC: Marginal cost
-Refer to Figure 11.9. 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 perfect competition, the market achieves allocative efficiency where price equals marginal cost (P=MC). In this case, that occurs at point Q where the demand curve intersects the marginal cost curve. The equilibrium price is given by AQ, and the quantity traded is QM. 
Consumer surplus is the difference between the maximum willingness to pay and the actual price paid. In this case, consumer surplus is represented by the area HMQ. Therefore, option C is the correct answer.

The Figure Given Below Shows the Cost and Revenue Curves