Author Question: The equivalent variation is always less than the consumer's income Indicate whether the statement ... (Read 14 times)

hbsimmons88 · **on:** Jul 1, 2018

The equivalent variation is always less than the consumer's income

Indicate whether the statement is true or false

Question 2

Mergers harm society.

A) True. Firms merge to avoid antitrust laws and increase their prices.
B) Maybe. It depends on whether the effect on prices is larger from reducing competition or increasing efficiency.
C) False. Firms gain economies of scale and pass the price savings on to their customers.
D) True. Total surplus is reduced when firms merge.

Harbringer · **Reply #1 on:** Jul 1, 2018

Answer to Question 1

True . The amount a person will pay to prevent a price change (EV) cannot exceed their available income.

Answer to Question 2

B