Figure: Costs and Demand for a Monopolistic Competitor (Figure

question 95

Multiple Choice

Figure: Costs and Demand for a Monopolistic Competitor (Figure: Costs and Demand for a Monopolistic Competitor) What
Price should the firm charge?

• A)$15
• B)$10
• C)The firm cannot be profitable, so the price is zero.
• D)The firm is a price maker, so it should charge $20.

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Definitions:

Consumer Surplus

The variance between the total price consumers are ready and able to fork over for a good or service and the sum they ultimately pay.

Deadweight Loss

A loss of economic efficiency that can occur when the equilibrium for a good or a service is not achieved or is not achievable.

Consumer Surplus

The difference between the total amount that consumers are willing to pay for a good or service and the total amount they actually do pay.

Consumer Surplus

The difference between what consumers are willing to pay for a good or service and what they actually pay, indicating the economic benefit to consumers.