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2 10. Exercise 8.11. Deadweight Loss from a Merger. Consider a market that is initially served by two firms, each of which charges a price
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10. Exercise 8.11. Deadweight Loss from a Merger. Consider a market that is initially served by two firms, each of which charges a price of $10 and sells 100 units of the good. The long-run average cost of production is constant at $6 per unit. Suppose a merger increases the price of $14 and reduces the total quantity sold from 200 to 150. Compute the consumer loss associated with the merger. How does it compare to the increase in profitStep by Step Solution
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