Answered: 10 . Competitive Supermarkets A small…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

10 . Competitive Supermarkets

A small town is served by many competing supermarkets, which all have the same constant marginal cost.

Use the black point (plus symbol) to show the competitive price and quantity in this market. Then use the green area (triangle symbol) to shade the area representing consumer surplus in the market for groceries, and use the purple area (diamond symbol) to shade the area representing producer surplus.

Now suppose that the independent supermarkets combine into one chain.

Use the black point (plus symbol) to show the profit-maximizing monopoly outcome. Then use the green area (triangle symbol) to shade the area representing consumer surplus in the market for groceries, and use the purple area (diamond symbol) to shade the area representing producer surplus. Finally, use the black area (plus symbol) to shade the area representing deadweight loss.

Which of the following statements is true about the changes that occur after the supermarkets merge? Check all that apply.

Total surplus rises.

Producer surplus rises.

Consumer surplus remains unchanged.

The market quantity remains unchanged.

The market price increases.

Monopoly
Demand
Monopoly Outcome
Consumer Surplus
Marginal Cost
Producer Surplus
Deadweight Loss
Marginal Revenue
Quantity of Groceries
Price, Cost, Revenue

Competitive Market
Demand
Compettive Outcome
Consumer Surplus
Marginal Cost
Producer Surplus
Quantity of Oroceries

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 5 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions