a. An industry is currently performing competitively with price equal to marginal cost. If demand is P
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Question:
a. An industry is currently performing competitively with price equal to marginal cost. If demand is P = 200 − Q and LRMC = LRAC = 50, what are output and price?
b. If a series of mergers monopolizes the industry and results in lower costs such that LRMC = LRAC = 40, what happens to industry output and price?
c. Does this series of mergers improve welfare?
d. If the mergers reduced the monopolist’s costs to LRMC = LRAC = 20, would the mergers improve welfare?
Related Book For
International Economics Theory and Policy
ISBN: 978-0273754206
9th Edition
Authors: Paul R. Krugman, Maurice Obstfeld, Marc J. Melitz
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