Figure 15.2 shows the cost and revenue curves of a monopolist. The consumer surplus that results if the monopoly is regulated and it charges a price equal to MC is shown by the _____.
Figure 15.2

Question

Figure 15.2 shows the cost and revenue curves of a monopolist. The consumer surplus that results if the monopoly is regulated and it charges a price equal to MC is shown by the _____. ​
Figure 15.2​

Quizplus · Accepted Answer

If the monopoly is regulated and charges a price equal to MC, it will produce at the point where marginal cost intersects the demand curve, which is point E. The price charged will be P*, which is lower than the price charged by the monopoly at the profit-maximizing output level (point B). The consumer surplus that results from this regulation is shown by the triangular area adf.

Figure 152 Shows the Cost and Revenue Curves of a Monopolist