Consider an industry with three firms, with demand curves as given below. Q1 = 140 -12P1 +

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Consider an industry with three firms, with demand curves as given below.

Q1 = 140 -12P1 + 3P2 + 3P3 Q2 = 130 – 10P2 + 3P1 + 2P3 Q3 = 135 -9P3 + 2P1 + 2P

2.Each firm has a marginal cost of 4.1.

Calculate the pre-merger prices.2. Assume that firms 1 and 2 merge, to form a new firm “M”. Assume also that the merger allows M to reduce marginal cost from 4 to 2. Firm 3’s marginal cost remains at 4. What are the new equilibrium prices?

Related Book For answer-question

Intermediate Microeconomics

ISBN: 978-0393123968

9th edition

Authors: Hal R. Varian

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Posted Date: May 08, 2019 05:43 AM

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Consider an industry with three firms, with demand curves as given below. Q1 = 140 -12P1 +

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1 Premerger prices Each firm will try to maximize their profit ie MRMC for each firm will de... View the full answer

Intermediate Microeconomics

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