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 changes in work rules by Venture Company employees that led to higher worker productivity.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