Use the figure below to answer the following questions.

Figure 13.3.3
-Consider the revenue and cost curves in Figure 13.3.3. What is the difference in consumer surplus between a single-price monopoly and a perfectly competitive market?
A)EADH
B)EABH
C)ABD
D)ACD
E)FHDC

Question

Use the figure below to answer the following questions.
  
Figure 13.3.3
-Consider the revenue and cost curves in Figure 13.3.3. What is the difference in consumer surplus between a single-price monopoly and a perfectly competitive market?
A)EADH 
B)EABH 
C)ABD 
D)ACD 
E)FHDC

Quizplus · Accepted Answer

In a perfectly competitive market, the price would be at point D where the demand curve intersects the supply curve. The consumer surplus would be the area above the price and below the demand curve, which is the triangle EAD. 
In a single-price monopoly, the price would be at point H where the marginal revenue curve intersects the marginal cost curve. The consumer surplus would be the area above the price and below the demand curve, which is the trapezoid EADH. 
The difference in consumer surplus between the two markets is the difference between the areas of the two shapes, which is the rectangle ABGH. Therefore, the answer is A) EADH.

Use the Figure Below to Answer the Following Questions