How does monopoly affect consumer surplus Is it
- Slides: 5
How does monopoly affect consumer surplus? Is it good or bad?
Equilibrium for the perfectly competitive industry $12 MC 11 10 9 What quantity of output will be produced? What price will the market establish? 8 7 6 Calculate the amount of consumer surplus 5 4 Calculate the amount of producer surplus 3 2 D 1 0 1 2 3 4 5 6 7 8 9 10 11 12
Equilibrium for the perfectly competitive industry $12 MC 11 10 9 8 7 6 5 4 What price will the market establish? $6 Consumer surplus Calculate the amount of consumer surplus $18 (6 x 6)/2 Calculate the amount of producer surplus $18 (6 x 6)/2 Producer surplus 3 2 D 1 0 1 2 3 What quantity of output will be produced? 6 4 5 6 7 8 9 10 11 12
Equilibrium for the monopolist $12 MC 11 10 ATC 9 What quantity of output will be produced? What price will the market establish? 8 7 6 Calculate the amount of consumer surplus 5 4 Calculate the amount of producer surplus 3 2 1 D MR 0 1 2 3 4 5 6 7 8 9 10 11 12 What portion of consumer surplus in the competitive situation was transferred to the producer in the monopoly situation?
Equilibrium for the monopolist $12 MC 11 10 ATC 9 8 7 6 5 4 3 2 1 D MR 0 1 2 3 4 5 6 7 8 9 10 11 12 What quantity of output will be produced? 4 What price will the market establish? $8 Calculate the amount of consumer surplus $8 (4 x 4/2) Calculate the amount of producer surplus $24 (4 x 4/2)+(4 x 4) What portion of consumer surplus in the competitive situation was transferred to the producer in the monopoly situation? $8 (2 x 4) or (4/9)