The following diagram shows the (industrywide) demand for widgets and the associated marginal revenue curve. When the industry is monopolized, the marginal cost curve is MCM. When the industry is competitive, the industry's marginal cost curve is MCC. Suppose the industry is currently monopolized and you are a judge with the power to break up the monopoly into several competing firms. In order to exercise that power in accordance with the efficiency criterion, which four of the labeled areas would you want to measure? (You are allowed to measure any four areas but no more.) How would you use that information to guide yourdecision?

Transcribed Image Text:

Price MCC A B MCM G H MR Quantity