Question: Please help with only correct answers Part A Two physical therapy firms want to merge. The price elasticity of demand for physical therapy is -0.40.

 Please help with only correct answers Part A Two physical therapy

Please help with only correct answers

firms want to merge. The price elasticity of demand for physical therapyis -0.40. Firm A has a volume of 10,400, fixed costs of

Part A Two physical therapy firms want to merge. The price elasticity of demand for physical therapy is -0.40. Firm A has a volume of 10,400, fixed costs of $50,000, marginal costs of $20, and a market share of 8 percent. Firm B has a volume of 15,600, fixed costs of $60,000, marginal costs of $20, and a market share of 12 percent. The merged firm has a volume of 26,000, fixed costs of $100,000, marginal costs of $20, and a market share of 20 percent. A.What are the total costs, prices, revenues, and profits for each firm and for the merged firm? See the table . B.How does the merger affect markups and profits? Q MC FC TC Share Market FIRM Price Revenue Profit ? APT 10,400 $20 $50,000 8% -0.4 BPT 15,600 $20 $60,000 12% -0.4 Merged 26,000 $20 $100,000 20% -0.4 HINT: total cost = fixed cost (FC) + variable cost ( i.e. VC or MC-per unit incremental cost)* Number of Units ( i.e. Quantity or Q) You were provided the Market elasticity. How would you find the Firm elasticity? Firm e= Market e / Firm share in the market You need to apply your pricing formula to find prices P= MC * (e/1+e) (CHAPTER 12)C E H M N WACC WITH FOLTATION COSTS 5. Source Ture Units Total Market Value Weight After far Cast 6 Deb WACC- 1 Additional Bood Data Additional Preferred Data Additional Common Data 12 Tax Rate $1.00 Dividend O 31 00 Thi Flotation Is Growth Rate Face Value 76 Flotation 540 WACO WITHOLTILOTATION COSTS Sourns Price Cuts Tol Market Value Withi Afterias Cont 1 Deb Preferred Additional Bond Dorn Additional Preferred Data Additional Common Data Tax Rate 20%% Dividend $1 00 Dividend O Thi Flotation 15 Growth Rate 12 Fare Valar 51 020 Flotation 11 Maturity M Flotation $40

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!