The above figure shows a market.
-If the market in the figure above changes from perfectly competitive to a profit-maximizing single-price monopoly,the amount of the gain in producer surplus is the area ________.

Question

Quizplus · Accepted Answer

In a transition from perfect competition to a monopoly, the producer surplus increases because the monopolist can charge a higher price and reduce output to maximize profits. The gain in producer surplus is represented by the area between the demand curve and the monopolist's marginal cost curve, from the competitive quantity to the monopolist's quantity. This area is BFGH, as it captures the additional revenue the monopolist gains by reducing output and increasing price compared to the competitive outcome.

The Above Figure Shows a Market