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 the market diagram.Relative to the surplus they would receive in a competitive market,consumers lose how much surplus because there is a monopoly?
A) Area F + G + H
B) Area C + D + E
C) Area E + H
D) Area A + B

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 the market diagram.Relative to the surplus they would receive in a competitive market,consumers lose how much surplus because there is a monopoly?
A) Area F + G + H 
B) Area C + D + E 
C) Area E + H 
D) Area A + B

Quizplus · Accepted Answer

The area representing the loss in consumer surplus due to monopoly is the area between the demand curve and the monopoly price (represented by the red line in the diagram), and above the quantity consumed (represented by the blue line in the diagram). This area is equal to C + D + E. Therefore, B is the correct choice.

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