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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 produce surplus. Competitive Market Demand Competitive Outcome Consumer Surplus Marginal Cost Producer Surplus Quantity of Groceries Price, Cost, Rev enue

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 produce surplus. Competitive Market Demand Competitive Outcome Consumer Surplus Marginal Cost Producer Surplus Quantity of Groceries Price, Cost, Rev enue

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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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. Competitive Market Demand Competitive Outcome Consumer Surplus Marginal Cost Producer Surplus Quantity of Groceries Price, Cost, Rev enue
Transcribed Image Text: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. Competitive Market Demand Competitive Outcome Consumer Surplus Marginal Cost Producer Surplus Quantity of Groceries Price, Cost, Rev enue
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. Monopoly Demand Monopoly Outcome Consumer Surplus Marginal Cost Producer Surplus Deadweight Loss Marginal Revenue Quantity of Groceries Which of the following statements is true about the changes that occur after the supermarkets merge? Check all that apply. O The market quantity remains unchanged. Producer surplus rises. O The market price increases. O Total surplus rises. O Consumer surplus remains unchanged. Price, Cost, Revenue
Transcribed Image Text: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. Monopoly Demand Monopoly Outcome Consumer Surplus Marginal Cost Producer Surplus Deadweight Loss Marginal Revenue Quantity of Groceries Which of the following statements is true about the changes that occur after the supermarkets merge? Check all that apply. O The market quantity remains unchanged. Producer surplus rises. O The market price increases. O Total surplus rises. O Consumer surplus remains unchanged. Price, Cost, Revenue
Expert Solution
Step 1

In a monopoly, there is a single firm selling the unique product. This implies that the market has full control over the market price. Price charged by a monopoly is higher and output produced is less than the efficient quantity.

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