Question: Pizza is provided by a competitive industry. Suppose that in a burst of generosity, the producers of pizza decided to continue producing the same quantity

Pizza is provided by a competitive industry. Suppose that in a burst of generosity, the producers of pizza decided to continue producing the same quantity as always, but to give their pizzas away for free.
a. Use a graph to show the change in consumer and producer surpluses.
b. Is it possible that (despite what your graph shows) this burst of generosity could make consumers as a group worse off? Why or why not?

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a b In the graph consumers gain area B C while producers lose the same area This does not ... View full answer

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