Graph 15-4 This graph depicts the demand and marginal-cost curves of a profit-maximising monopolist.Use the graph to answer the following question(s).
-Refer to Graph 15-4.If the monopoly operates at an output level below q₀, decreasing output would:
A)raise the price and raise total surplus
B)lower the price and raise total surplus
C)raise the price and lower total surplus
D)lower the price and lower total surplus

Question

Graph 15-4  This graph depicts the demand and marginal-cost curves of a profit-maximising monopolist.Use the graph to answer the following question(s).
-Refer to Graph 15-4.If the monopoly operates at an output level below q₀, decreasing output would:
A)raise the price and raise total surplus 
B)lower the price and raise total surplus 
C)raise the price and lower total surplus 
D)lower the price and lower total surplus

Quizplus · Accepted Answer

Operating at an output level below q₀ and further decreasing output would raise the price due to the downward sloping demand curve. This price increase would reduce the quantity demanded, leading to a lower total surplus as the reduction in consumer and producer surplus due to the lower quantity sold outweighs any gains from the higher price.

Graph 15-4 This Graph Depicts the Demand and Marginal-Cost