Market Diagram

The following questions refer to the accompanying market diagram. PC and QC are the equilibrium price and quantity if the firm behaves competitively, and PM and QM are the equilibrium price and quantity if the firm is a simple monopoly.

-Refer to Market Diagram.The difference between producer's surplus as a monopolist and producer's surplus when setting price at what would exist in a competitive market is
A) Area C + D + E - G - H.
B) Area C + D - H.
C) Area C + D + E - A - B.
D) Area E + H.

Question

Market Diagram

The following questions refer to the accompanying market diagram. PC and QC are the equilibrium price and quantity if the firm behaves competitively, and PM and QM are the equilibrium price and quantity if the firm is a simple monopoly.

-Refer to Market Diagram.The difference between producer's surplus as a monopolist and producer's surplus when setting price at what would exist in a competitive market is
A) Area C + D + E - G - H. 
B) Area C + D - H. 
C) Area C + D + E - A - B. 
D) Area E + H.

Quizplus · Accepted Answer

Producer's surplus as a monopolist is area C + D. When setting price at what would exist in a competitive market, producer's surplus reduces to area H. The difference between the two is C + D - H, which is option B.

Market Diagram The Following Questions Refer to the Accompanying Market Diagram. PC