4. 3. The graph below is intended to repre-sent the welfare effect of a merger inwhich prices change from a premergercompetitive price p. to a postmergerprice pm, where both firms chargedthe same price premerger and wereprofitable and where both firms facedmarginal costs c. before the mergerwhich went down to cm after the merger.(a) Insert the labels pc, Pm, qc, qm at theright places in the graph.(b) Label the demand curve in thegraph.(c) For each of the fifteen regions be-tween the axes and the demandcurve, indicate how the mergerchanged who got what. For in-stance, write P → N to mean thatproducers had the area before themerger and no one has it after.(d) What is deadweight loss in thisgraph if fixedosts do not change?

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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The graph below is intended to repre- sent the welfare effect of a merger in which prices change from a premerger competitive price p, to a postmerger price pm, where both firms charged the same price premerger and were profitable and where both firms faced marginal costs c, before the merger