Figure 8-11 Figure 8-11 shows the cost and demand curves for a monopolist.
-Refer to Figure 8-11.Assume the firm maximises its profits.What is the amount of consumer surplus?

Question

Figure 8-11  Figure 8-11 shows the cost and demand curves for a monopolist.
-Refer to Figure 8-11.Assume the firm maximises its profits.What is the amount of consumer surplus?

Quizplus · Accepted Answer

Consumer surplus is the area below the demand curve and above the price charged by the monopolist. In this case, the consumer surplus is the area of the triangle below the demand curve and above the monopolist's price, which is (1/2) x (30-12) x (18) = $186. To find this, we calculate the difference between the highest price a consumer would be willing to pay (which is given by the demand curve) and the actual price charged by the monopolist (which is given by the marginal revenue curve).

Figure 8-11 Figure 8-11 Shows the Cost and Demand