Part 1Minnie's Mineral Springs is a single-price monopoly. The graph shows Minnie's demand curve, marginal revenue curve, and marginal cost curve, and the profit-maximizing price and output.Use the graph to determine the producer surplus generated from Minnie's Mineral Springs' water production and consumption.Is Minnie's an efficient producer of water? Explain.Suppose that new wells were discovered nearby to Minnie's and Minnie's faced competition from new producers. Explain what would happen to Minnie's output, price, and profit. Part 1The producer surplus generated from Minnie's Mineral Springs' water production and consumption is shown on the graph as Area _______. A. A + Area B
B. B
Your answer is not correct.C. C
D. A
This is the correct answer. Part 2Minnie's _______ the efficient quantity of water because at the quantity produced _______. A. produces; Minnie's maximizes economic profit B. does not produce; marginal social benefit exceeds marginal social cost and a deadweight loss arises C. produces; producer surplus is maximized D. does not produce; producer surplus is greater than consumer surplus Part 1
02460246810Quantity (bottles per hour)Price and cost (dollars per bottle)Upper DDMRMRMCMCUpper AAUpper BBUpper CC Edit coordinates (0,0) x y graph

Question

Part 1​Minnie's Mineral Springs is a​ single-price monopoly. The graph shows​ Minnie's demand​ curve, marginal revenue​ curve, and marginal cost​ curve, and the​ profit-maximizing price and output.Use the graph to determine the producer surplus generated from​ Minnie's Mineral​ Springs' water production and consumption.Is​ Minnie's an efficient producer of​ water? Explain.Suppose that new wells were discovered nearby to​ Minnie's and​ Minnie's faced competition from new producers. Explain what would happen to​ Minnie's output,​ price, and profit. Part 1The producer surplus generated from​ Minnie's Mineral​ Springs' water production and consumption is shown on the graph as Area​ _______. A. A​ + Area B
B. B
Your answer is not correct.C. C
D. A
This is the correct answer. Part 2​Minnie's _______ the efficient quantity of water because at the quantity produced​ _______. A. ​produces; Minnie's maximizes economic profit B. does not​ produce; marginal social benefit exceeds marginal social cost and a deadweight loss arises C. ​produces; producer surplus is maximized D. does not​ produce; producer surplus is greater than consumer surplus Part 1
02460246810Quantity (bottles per hour)Price and cost (dollars per bottle)Upper DDMRMRMCMCUpper AAUpper BBUpper CC Edit coordinates (0,0) x y graph

BlackTom AI · Accepted Answer

The question asks us to identify which labeled area on Minnie's mineral springs graph represents the producer surplus from water production and consumption, for Part 1. 
Option A: 'A + Area' implies the producer surplus is the sum of area A and some additional unspecified area. This is unlikely because producer surplus is a single, specific region—it's the area between the price the monopolist receives and the marginal (or average) cost up to the quantity produced. Adding an extra area to A would double-count or misstate the standard definition, so this choice misidentifies the exact region that constitutes producer surplus. 
Option B: 'B' designates area B as the producer surplus. In a typical monopoly diagram, area B would usually represent a different concept (for example, a portion of deadweight loss or a savings area, depending on the labeling on the graph), not the entire producer surplus. Therefore this option is unlikely to be correct because it does not align with the standard interpretation of producer surplus as the price minus marginal cost integrated over Q. 
Option C: 'C' designates area C as the producer surplus. Similar to option B, area C is typically used to denote a different region (often associated with deadweight loss to the left or right of the equilibrium, or a portion of costs), not the producer surplus area. Hence this choice does not match the conventional definition. 
Option D: 'A' designates area A as the producer surplus. If we recall the standard monopoly diagram, producer surplus is the area below the price line and above the marginal cost (or average cost, depending on the labeling) up to the quantity produced. The region labeled 'A' on such graphs is commonly the triangle or trapezoid that captures this difference, making it the correct geometric representation of producer surplus. Therefore, this option correctly identifies the producer surplus region. 
In summary, the conventional interpretation in a monopoly graph is that producer surplus corresponds to the region between the price (MR = price in a single-price monopoly) and the cost curve up to the output, which is most consistently represented by area A on the provided diagram. The other labeled areas (B and C) typically represent other welfare components or cost regions, and the 'A + Area' option misstates the single, well-defined producer surplus region.

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