Horizontal Merger The Following Questions Refer to the Accompanying Diagram, Which Shows

Multiple Choice

Horizontal Merger

The following questions refer to the accompanying diagram, which shows the effects of a horizontal merger. Before the merger, the firm behaves competitively producing Q0 and charging P0. The merger lowers the firm's marginal cost and gives the firm enough market power to switch to the monopoly equilibrium.



-Refer to Horizontal Merger.If area F + G is larger than area E,we can conclude that the horizontal merger

A) will reduce economic efficiency.
B) causes both consumers' and producer's surplus to rise.
C) will not increase the firm's profit and thus will not be undertaken.
D) creates an increase in social gain.