Consumer surplus in the unregulated monopoly market in the figure below is:

Question

Quizplus · Accepted Answer

Consumer surplus is the difference between what consumers are willing to pay for a good or service and what they actually pay. In a monopoly market, the price is set higher than in a perfectly competitive market, resulting in lower consumer surplus. In the given figure, the monopolist produces at a quantity of 3 and charges a price of $8. Consumer surplus is the area above the price line and below the demand curve up to the quantity of 3. Therefore, consumer surplus is the triangle with base 3 and height (10-8) which is equal to (1/2) x 3 x 2 = $3.
Thus, the correct choice is B.

Consumer Surplus in the Unregulated Monopoly Market in the Figure