Refer to Figure 15-11. What is the size of the deadweight loss prior to Verizon entering the market and what happens to this deadweight loss after Verizon does enter the market?
A) The deadweight loss of area C+D is converted to consumer surplus
B) The total deadweight loss is the area D+F; D is converted to consumer surplus and F to producer surplus.
C) The deadweight loss of area D is converted to consumer surplus.
D) The deadweight loss of area D is converted to producer surplus.
C
You might also like to view...
If you are willing to purchase a house for $300,000 and you purchase the house for $275,000 . this transaction will generate:
a. There is no surplus created b. $25,000 worth of seller surplus and unknown amount of buyer surplus c. $10,000 worth of buyer surplus and $15,000 of seller surplus d. $25,000 worth of buyer surplus and unknown amount of seller surplus
Which of the following is true of perfectly competitive firms?
a. For a perfectly competitive firm, as long as the price derived from expanded output exceeds the marginal cost of that output, the expansion of output creates additional economic profits. b. Producing at the profit-maximizing output level means that a firm is actually earning economic profits c. A competitive firm earning zero economic profit will be unable to continue in operation over time. d. A perfectly competitive firm will operate in the short run only at price levels greater than or equal to average total costs.