The following questions refer to the accompanying market diagram. PC and QC are the equilibrium price and quantity if the firm behaves competitively, and PM and QM are the equilibrium price and quantity if the firm is a simple monopoly.
Question 1) What area represents the producer's surplus earned in the monopoly equilibrium?
A) Area A + C + F.
B) Area C + F.
C) Area C + D + F + G.
D) Area C + D + E.
Question 2) Relative to the surplus they would receive in a competitive market, consumers lose how much surplus because there is a monopoly?
A) Area F + G + H
B) Area C + D + E
C) Area E + H
D) Area A + B
1 Area C + D + F... View the full answer