The figure shows the market demand curve for penicillin, an antibiotic medicine. Initially, themarket was supplied by perfectly competitive firms Later, the government granted the exclusiveright to produce and sell penicillin to one firm. The figure also shows the marginal revenue curve(MR) of the firm once it begins to operate as a monopoly. The marginal cost is constant at $3,irrespective of the market structureWhat is the surplus enjoyed by the firm when it is the sole supplier of the medicine?OA. 590OB. $180OC. $30OD. $60Price/Cost (5)1011020 30 40MRDemand50 60 7080 90 Quantity(units)

The monopoly market structure has only one seller in the market. If is also the sole supplier…

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What is the surplus enjoyed by the firm when it is the sole supplier of the medicine? OA. $90 OB. $180 OC. $30 OD. $60

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter14: Monopoly

Section: Chapter Questions

Problem 14.3P

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Question

The figure shows the market demand curve for penicillin, an antibiotic medicine. Initially, the
market was supplied by perfectly competitive firms Later, the government granted the exclusive
right to produce and sell penicillin to one firm. The figure also shows the marginal revenue curve
(MR) of the firm once it begins to operate as a monopoly. The marginal cost is constant at $3,
irrespective of the market structure
What is the surplus enjoyed by the firm when it is the sole supplier of the medicine?
OA. 590
OB. $180
OC. $30
OD. $60
Price/Cost (5)
10
1
10
20 30 40
MR
Demand
50 60 70
80 90 Quantity
(units)

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