Refer to Monopoly Supplier and Manufacturer. The vertical merger causes social gain to
The following questions refer to the accompanying diagram, which shows a monopoly leather supplier selling leather to a monopoly shoe manufacturer. The leather supplier initially produces QM and charges the shoe manufacturer PM. Then the leather supplier acquires the shoe manufacturer in a vertical merger.
a. increase by area A + B.
b. increase by area E + H.
c. decrease by area B + D + G.
d. remain equal to area A + B + C + D + F + G.
b. increase by area E + H.
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Indicate whether the statement is true or false
In the above figure, the relationship between x and y is
A) positive, with slope decreasing as x increases. B) negative, with slope decreasing as x increases. C) negative, with slope increasing as x increases. D) positive, with slope increasing as x increases.
If an individual moves money from a money market deposit account to currency
A) M1 increases and M2 stays the same. B) M1 stays the same and M2 increases. C) M1 stays the same and M2 stays the same. D) M1 increases and M2 decreases.
Adverse selection exists because ________
A) moral hazard exists B) asymmetric information exists C) of government regulation D) financial innovation continually occurs