Figure 15-11

In 2011, Verizon was granted permission to enter the market for cable TV in Upstate New York, ending the virtual monopoly that Time Warner Cable had in most local communities in the region. Figure 15-11 shows the cable television market in Upstate New York.
-Refer to Figure 15-11.What is the size of the deadweight loss prior to Verizon entering the market and what happens to this deadweight loss after Verizon does enter the market?
A)The deadweight loss of area D is converted to consumer surplus.
B)The deadweight loss of area C+D is converted to consumer surplus
C)The deadweight loss of area D is converted to producer surplus.
D)The total deadweight loss is the area D+F; D is converted to consumer surplus and F to producer surplus.

Question

Figure 15-11
  
In 2011, Verizon was granted permission to enter the market for cable TV in Upstate New York, ending the virtual monopoly that Time Warner Cable had in most local communities in the region. Figure 15-11 shows the cable television market in Upstate New York.
-Refer to Figure 15-11.What is the size of the deadweight loss prior to Verizon entering the market and what happens to this deadweight loss after Verizon does enter the market?
A)The deadweight loss of area D is converted to consumer surplus. 
B)The deadweight loss of area C+D is converted to consumer surplus 
C)The deadweight loss of area D is converted to producer surplus. 
D)The total deadweight loss is the area D+F; D is converted to consumer surplus and F to producer surplus.

Quizplus · Accepted Answer

When Verizon enters the market, the deadweight loss of area D is converted to consumer surplus as competition increases, leading to lower prices and increased consumer benefits.

Figure 15-11 In 2011, Verizon Was Granted Permission to Enter the Market