The figure below 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:
Figure 9.6

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

The figure below 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:​ ​
Figure 9.6
​

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 the difference between the maximum amount a consumer is willing to pay for a good or service and the actual price they pay. In this case, at the profit-maximizing level of output, the price is $136 and the quantity sold is around 51.5 units. Therefore, the consumer surplus is represented by the area under the demand curve and above the price line corresponding to $136.

The Figure Below Shows the Cost and Revenue Curves for a Monopolist