(Figure: Monopoly Pricing and Output Decisions) Based on the Graph

question 231

Multiple Choice

(Figure: Monopoly Pricing and Output Decisions) Based on the graph, which statement is TRUE about this monopolist?

• A) It is operating at a profit.
• B) It is operating at a loss but will continue to produce.
• C) It is operating at a loss and will shut down.
• D) It is operating at a normal profit.

---

Definitions:

Consumer Surplus

The difference between what consumers are willing to pay for a good or service and what they actually pay.

Producer Surplus

The difference between the price that suppliers actually receive and the minimum price they would be willing to accept. It measures the net gains to producers and resource suppliers from market exchange. It is not the same as profit.

Soft Coal

Another term for bituminous coal; a type of coal known for its high moisture content and smoke-producing properties.

Supply Curve

A graphical representation showing the relationship between the price of a good or service and the amount of the good or service that suppliers are willing and able to provide at various prices.