Consider the monopoly in the figure below with price regulated at $2 per unit.Consumer surplus at the regulated price is:
A) $9.
B) $8.
C) $4.50.
D) There is insufficient information to determine consumer surplus.

Question

Quizplus · Accepted Answer

Consumer surplus is the difference between the price consumers are willing to pay for a good and the price they actually pay. In this case, consumers are willing to pay up to $4.50 per unit for the good, but they are only paying $2 per unit. Therefore, consumer surplus is $4.50 - $2 = $2.50.

Consider the Monopoly in the Figure Below with Price Regulated