For a monopoly market, total surplus can be defined as the value of the good to:
A)consumers minus the costs of making the good
B)consumers plus the cost of making the good
C)producers minus the cost incurred by consumers
D)producer plus the cost incurred by consumers

Question

Quizplus · Accepted Answer

Total surplus in a monopoly market can be defined as the difference between the value of the good to consumers and the cost of producing the good. This can be expressed as the area between the demand curve and the marginal cost curve up to the quantity produced by the monopolist. Therefore, total surplus in a monopoly market is equal to consumer surplus (the difference between the maximum price consumers are willing to pay and the price they actually pay) plus producer surplus (the difference between the price received by the monopolist and the cost of production). In this context, total surplus is the value of the good to consumers minus the cost of making the good.

For a Monopoly Market, Total Surplus Can Be Defined as the Value