The government encourages innovation by giving companies monopolies on products. D represents the demand curve for the cure for the common cold. In a perfectly competitive market, the drug would be sold at a price equal to its marginal cost, $5, and consumer surplus would be A + B + C. However, at this price, the firm would be unable to recover the fixed cost of developing the drug and would choose not to invest in the cure for the common cold. By giving the firm a patent, the government allows it to recover the costs of innovation, and the firm produces at the monopoly price P_m and quantity Q_m. The consumer surplus is now the triangle A.