Figure 91 Illustrates the Market Conditions Facing Sony Company and American

Multiple Choice

Figure 9.1 illustrates the market conditions facing Sony Company and American Company initially operating as competitors in the domestic ball bearing market.Each firm realizes constant long-run costs,MC0=AC0.
Figure 9.1.International Joint Venture

-Consider Figure 9.1.Assume Venture Company's formation yields new cost reductions,indicated by MC1=AC1,which result from technological advances.Realizing that Venture Company results in a deadweight loss of consumer surplus,the net effect of Venture Company's formation on the welfare of the domestic economy is:

A) No change
B) Gain of $2
C) Gain of $4
D) Loss of $2