A (mini-) refrigerator monopolist, because of strong scale economies, would charge a price of $120 and sell forty-five refrigerators in Iceland. Its average cost would be $60. On the other hand, the Iceland Planning Commission has determined that five refrigerator suppliers would be sufficiently competitive to bring price into equality with average cost. The five-firm equilibrium would yield a price of $100 and a total output of fifty refrigerators.
a. Consumer surplus under the five-firm industry organization would be larger than under monopoly. If the demand curve is linear, by how much is consumer surplus higher?