Qusetion: In a small town which has two grocery stores, the total demand and the total supply curve for groceries are estimated to be Qd = 100- P and Qs = 4P - 200. 3/3 The stores are thinking of merging due to the retirement of one owner. A local attorney is arguing against the potential merger, suggesting that the supply curve will become Q s =2P - 100 and the prices will go up and the consumer surplus will be reduced.
a) Do you agree? Please show all work to get credit for this question.
b) Illustrate your findings in a graph as well as with dollars for the change in consumer surplus.