How Does the Demand Curve Facing a Home Monopolist Compare

question 33

Multiple Choice

How does the demand curve facing a home monopolist compare in a
No­trade situation to a situation in which a quota protects the
Monopolist's output?

• A)They are identical.
• B)The quota­protected demand curve lies to the right of the no­trade demand curve.
• C)The quota­protected demand curve lies to the left of the no­trade demand curve.
• D)The no­trade demand curve is perfectly price elastic at the world price; the quota­protected demand curve has a negative slope.

---

Definitions:

Consumer Surplus

The variance between the actual cost paid by consumers and the maximum amount they're prepared to pay for a good or service.

Market Equilibrium

The point at which the quantity of a good or service demanded by consumers equals the quantity supplied by producers, resulting in a stable market price.

Price Ceiling

A government-imposed limit on how high a price can be charged for a product or service to prevent market prices from rising above a certain level.

Consumer Surplus

The variation between the price consumers are willing to offer for a product or service and the actual payment made.