In the short run, the price at which a firm's total revenues equal its total costs is
A) a point of positive profits.
B) a no return price.
C) the short-run shutdown point.
D) the short-run break-even point.
D
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Refer to Horizontal Merger. As a consequence of the merger, consumers lose surplus equal to
The following questions refer to the accompanying diagram, which shows the effects of a horizontal merger. Before the merger, the firm behaves competitively producing Q0 and charging P0. The merger lowers the firm's marginal cost and gives the firm enough market power to switch to the monopoly equilibrium.
a. Area A + B.
b. Area C + D.
c. Area C + D + E.
d. Area G.
Firm X belongs to Country A and Firm Y belongs to Country B. The two firms are a global duopoly. Each is considering initiating exports to a large foreign country that currently has no imports and no domestic production or consumption of this product. The figure shows the payoffs if neither, one, or both of the firms initiates exports of this product. Explain why this game has no clear solution, so both firms could decide not to export. Explain why country B's government should consider subsidizing Firm Y's exports.
What will be an ideal response?