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Wendys and McDonalds, both fast food chains, are planning a merger. Assume that the synergy effect is smaller than the monopoly effect. Overall, the post-merger

Wendys and McDonalds, both fast food chains, are planning a merger. Assume that the synergy effect is smaller than the monopoly effect. Overall, the post-merger price ____________ and producer surplus ________.

  1. decreases ; can either increase or decrease
  2. increases; can either increase or decrease
  3. increases ; decreases
  4. increases ; increases
  5. decreases; increases

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