c)Firms 1 and 2 are considering a merger. Under the merger, a newfirm would be created with profit function 12(91, 92, 93) = ₁ + 1², so that thisnew firm would be a multi-plant firm.In equilibrium, the new firm would produce ₁ =In equilibrium, the new firm would produce 92=d)in plant 1.in plant 2.The total profit of the new firm in equilibrium would beHence assuming firms 1 and 2 split the profits evenly, the firms◆ merge.The total profit of the monopolist firm in equilibrium ise)Now, suppose that all three firms are considering a merger! Inequilibrium, what quantity would this monopolist produce? Q = 91 +92 + 93 =Hence, assuming that firms 1, 2, and 3 split the profits evenly, the firmsmerge. A market comprises three firms i E {1, 2, 3} competing in quantities. Inversemarket demand is given by p(Q) = 100 - 50, where Q = 9₁ +92 +93. Eachfirm i has marginal cost c₁, and therefore profit functionTi (91, 92, 93) = (p - ci)qi.a)Suppose c₁ = 1, c₂ = 4, and c3 = 7. Find the best responsefunctions for each firm by filling numbers in the blanks below.9 (92, 93) =(92 +93).9₂ (91, 93) =(91 +93).93 (91, 92) =(91 +92).b)In equilibrium, we know that the level of output for each firm is q₁ =5.4, 92== 4.8, 93 = 4.2.Compute the profit of firm 1: ₁ =Compute the profit of firm 2: ₂ =

Total Number of firms = 3 Market demand function : P = 100 - 5Q,Where,, 99, 254); position:…

A market comprises three firms i E {1,2,3} competing in quantities. Inverse market demand is given by p(Q) = 100 - 50, where Q = 91 +92 + 93. Each firm i has marginal cost c;, and therefore profit function

A market comprises three firms i E {1,2,3} competing in quantities. Inverse market demand is given by p(Q) = 100 - 50, where Q = 91 +92 + 93. Each firm i has marginal cost c;, and therefore profit function

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

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Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

c)
Firms 1 and 2 are considering a merger. Under the merger, a new
firm would be created with profit function 12(91, 92, 93) = ₁ + 1², so that this
new firm would be a multi-plant firm.
In equilibrium, the new firm would produce ₁ =
In equilibrium, the new firm would produce 92
=
d)
in plant 1.
in plant 2.
The total profit of the new firm in equilibrium would be
Hence assuming firms 1 and 2 split the profits evenly, the firms
◆ merge.
The total profit of the monopolist firm in equilibrium is
e)
Now, suppose that all three firms are considering a merger! In
equilibrium, what quantity would this monopolist produce? Q = 91 +92 + 93 =
Hence, assuming that firms 1, 2, and 3 split the profits evenly, the firms
merge.

A market comprises three firms i E {1, 2, 3} competing in quantities. Inverse
market demand is given by p(Q) = 100 - 50, where Q = 9₁ +92 +93. Each
firm i has marginal cost c₁, and therefore profit function
Ti (91, 92, 93) = (p - ci)qi.
a)
Suppose c₁ = 1, c₂ = 4, and c3 = 7. Find the best response
functions for each firm by filling numbers in the blanks below.
9 (92, 93) =
(92 +93).
9₂ (91, 93) =
(91 +93).
93 (91, 92) =
(91 +92).
b)
In equilibrium, we know that the level of output for each firm is q₁ =
5.4, 92
=
= 4.8, 93 = 4.2.
Compute the profit of firm 1: ₁ =
Compute the profit of firm 2: ₂ =

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