Which of the following statements is true about the changes that occur after the supermarkets merge?

Which of the following statements is true about the changes that occur after the supermarkets merge? Check all that apply.

The market price increases.
Consumer surplus remains unchanged.
The market quantity remains unchanged
Total surplus rises.
Producer surplus rises

Solutions

Expert Solution

Option A, E.

When two or more competing firms merge then the producer surplus rises along with their profits as their market share rises.

When firms merge, competition among firms fall, this will make the demand more inelastic due to which the prices rise when they merge.

Hence when supermarkets merge producer surplus Increases and the market prices rise.

Rahul Sunny answered 1 year ago

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