Question: Consider a market that is initially served by two firms, each of which charges a price of $16 and sells 100 units of the good. The long-run average cost of production is constant at $15 per unit. Suppose a merger will increase the price to $20 and reduce the total quantity sold from 200 to 150.

A. COMPUTE -- What is the consumer surplus [loss] associated with the merger.

B. COMPUTE -- What was the profit before the merger? after? increase?

C. How does the consumer loss compare to the increase in profit?

D. COMPUTE --- What is the net loss from the merger to SOCIETY?