A market has 10 sellers. The fifth and seventh in size merge, becoming the largest seller in the market. How can this merger support competition in the market?
A)If the merger increases the level of market power in the market.
B)If the newly merged seller becomes more efficient and offers lower prices.
C)If the least efficient of the eight sellers that did not merge goes bankrupt, further reducing the number of market sellers.
D)If average prices in the market rise after the merger.

Question

Quizplus · Accepted Answer

The merger can support competition by leading to the newly merged seller becoming more efficient and offering lower prices, which would put pressure on the remaining sellers to also improve their efficiency and offerings. This would ultimately benefit consumers and promote competition in the market.

A Market Has 10 Sellers