Refer to Horizontal Merger. If area F + G is larger than area E, we can conclude that the horizontal merger
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. will reduce economic efficiency.
b. causes both consumers' and producer's surplus to rise.
c. will not increase the firm's profit and thus will not be undertaken.
d. creates an increase in social gain.
d. creates an increase in social gain.
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When is price fixing among competitors not a violation of the antitrust laws?
A) Price fixing among competitors is always a violation of the antitrust law. B) when a cartel can maximize profit without behaving like a monopoly C) when price fixing leads to a more efficient outcome D) when price fixing does not result in predatory pricing
Refer to Figure 4-1. If the market price is $2.00, what is Arnold's consumer surplus?
A) $0.50 B) $1.00 C) $1.50 D) $3.00