Use the following figure to answer the question : Figure 11-1 : shows the downward-sloping demand curve [D] and marginal revenue [MR] curve and the upward-sloping marginal cost [MC] curve for a monopolist.
-Based on Figure 11-1,competitive firms will receive producer surplus equal to area:
A)ACFH.
B)EIF.
C)AVF.
D)AWEH.

Question

Use the following figure to answer the question : Figure 11-1 : shows the downward-sloping demand curve [D] and marginal revenue [MR] curve and the upward-sloping marginal cost [MC] curve for a monopolist. 
-Based on Figure 11-1,competitive firms will receive producer surplus equal to area:
A)ACFH. 
B)EIF. 
C)AVF. 
D)AWEH.

Quizplus · Accepted Answer

Producer surplus is the difference between the price received by the firm and the minimum price it is willing to accept to produce a certain quantity of output. In a competitive market, the price is determined by the intersection of the supply and demand curves, and all firms receive the same price, which is equal to the marginal cost. Therefore, producer surplus for a competitive firm is the area above the supply curve and below the price.

In Figure 11-1, the area above the marginal cost curve and below the price is equal to the triangle ACFH. This is the producer surplus for competitive firms. Therefore, the correct answer is A.

Use the Following Figure to Answer the Question : Figure