A small town is served by many competing supermarkets which, Ask an Expert

Economics

A small town is served by many competing supermarkets, which have constant marginal cost.

(a) Using a diagram of the market for groceries, show the consumer surplus, producer surplus, and total surplus.

(b) Now suppose that the independent supermarkets combine into one chain. Using a new diagram, show the new consumer surplus, producer surplus, and total surplus. Relative to the competitive market, what is the transfer from consumers to producers? What is the deadweight loss?

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M9292296

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