All Consumers Are Alike and Each Has an Inverse Demand $P =$

question 73

Multiple Choice

All consumers are alike and each has an inverse demand curve for a monopolist's product of $P =$ $100 - 2 Q$ . The marginal cost of production is constant at $M C = \$ 10$ . Let the monopolist charge a price of $\$ 10$ per unit purchased and a subscription fee of $\$ 2025$ that must be paid by each purchaser. What is the amount of consumer's surplus generated by this scheme?

• A) 0
• B) \(\$ 2025\)
• C) \$2025 multiplied by the number of consumers in the market.
• D) \(\$ 90\) multiplied by the number of units purchased.

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Definitions:

Bid

An offer of a certain price for something, especially in contexts like auctions or financial markets, where it reflects the amount a buyer is willing to pay.

English Auction

A type of public auction where bids are openly made and raised until no higher bids are forthcoming, with the highest bidder winning the item.

Rational Self-Interest

The principle that individuals tend to make decisions that they believe are best for themselves, maximizing their own utility.

Values

The principles or standards of behavior that are regarded as important in making decisions or judgments.