Use the Following to Answer Question

question 78

Multiple Choice

Use the following to answer question:
-(Figure: The Market for Beats by Dre) Use Figure: The Market for Beats by Dre.Assume that S_d represents the domestic supply curve and D_d represents the domestic demand curve.If the world price equals $100 and there is free trade,what is the gain in consumer surplus?

• A)$5 million
• B)$2.5 million
• C)$2.25 million
• D)$750,000

---

Definitions:

Fixed Cost

Costs that do not change with the volume of production, such as rent, salaries, and insurance premiums.

Carrying Cost

The total cost of holding inventory, including storage, handling, depreciation, and opportunity costs, over a certain period of time.