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, MC?=AC?.
Figure 9.1. International Joint Venture

-Consider Figure 9.1.Assume Venture Company's formation yields new cost reductions,indicated by MC?=AC?,which result from wage concessions accepted by Venture Company employees.The net effect of Venture Company's formation on the welfare of the domestic economy is:

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