Use the following to answer question:
-(Table: Lunch)Use Table: Lunch.This table shows market demand for picnic lunches for people taking all-day rafting trips on the river.Joe has a firm providing this service,and his marginal cost and average cost for each lunch are a constant $4.If Joe is a monopolist,what is consumer surplus in the long run?
A)$45
B)$90
C)$180
D)$360

Question

Use the following to answer question: 
-(Table: Lunch)Use Table: Lunch.This table shows market demand for picnic lunches for people taking all-day rafting trips on the river.Joe has a firm providing this service,and his marginal cost and average cost for each lunch are a constant $4.If Joe is a monopolist,what is consumer surplus in the long run?
A)$45 
B)$90 
C)$180 
D)$360

Quizplus · Accepted Answer

In the long run, a monopolist will set the price where marginal cost equals marginal revenue. Given that Joe's marginal cost is $4, he will set the price at this level. Consumer surplus is the area above the price and below the demand curve. If the demand curve is linear and the price is set at $4, the consumer surplus can be calculated based on the demand schedule provided in the table. The correct consumer surplus is $45.

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