Principles of Micoroeconomics, Student Value Edition
11th Edition
ISBN: 9780133024265
Author: Karl E. Case
Publisher: PEARSON
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Chapter 12, Problem 1P
To determine
Breaking up
Expert Solution & Answer
Explanation of Solution
The statement is disagreed because it is possible for the breakup to be a potential Pareto improvement even if it makes the shareholders worse off. Efficient change inculcates the changes that made some shareholders better off and others worse off but in which those who gain receive benefits that are greater than the costs imposed on the losers. This implies that the breakup will be an efficient change if the consumers will gain more than the shareholders lose.
Economics Concept Introduction
Pareto-efficiency: Pareto efficiency is an optimal economic state where the resource allocation is in such a way that it makes at least one person better off without making anyone worse off.
Monopoly: Monopoly is a market structure where there is only one seller of a good or service that does not have a close substitute.
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Chapter 12 Solutions
Principles of Micoroeconomics, Student Value Edition
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