Question

Graph to be used with Question 10 Dollars MC = AC MR 500 600 800 1,200 Q Megawatts of electricity produced by Ohio Edison

Consider the first graph (the one capturing electricity use) and answer each of the following six questions worth two points each. Identify the areas by letters at the corner points (3 letters for a triangle, 4 for a rectangle, etc).

a)        If this were a perfectly competitive firm Consumer Surplus = area ________________

b)        If this were a perfectly competitive firm Producer Surplus = area        ________________

c)         If this were a perfectly competitive firm Deadweigh Loss = area        ________________

d)        If this were a single price monopolist Consumer Surplus = area          ________________

e)        If this were a single price monopolist Producer Surplus = area            ________________

f)         If this were a single price monopolist Deadweight Loss = area            ________________

Answer 1

a)        If this were a perfectly competitive firm Consumer Surplus =  AFC

b)        If this were a perfectly competitive firm Producer Surplus = There is no producer surplus.

c)         If this were a perfectly competitive firm Deadweigh Loss = No Deadweight loss.

d)        If this were a single price monopolist Consumer Surplus = AGB

e)        If this were a single price monopolist Producer Surplus = GFEB

f)         If this were a single price monopolist Deadweight Loss = BEC