Consider a market of seven (7) equally-sized firms that compete through production. Market demand is P =
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Question:
- Consider a market of seven (7) equally-sized firms that compete through production. Market demand is P = 250- Q and each firm has a marginal cost of $10. What will be each INDIVIDUAL firm's quantity in this market?
- Consider a merger that transforms the market in the previous question to six (6) firms with one leader among them. What will be the expected INDIVIDUAL LEADER and INDIVIDUAL FOLLOWER quantities?
- The merger referred to in the previous question should be profitable for the firms involved, if there were no costs associated with the merger. What would the costs have to be to make the merger unprofitable?
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