A market has the following demand function: P = 120 - where Qe = E-1 Qi a) Assuming Cournot-Nash market, fill in the table below when firm one has MC, = 10, firm two has MC, = 20 and firm three has MC, = 20. Additionally, there is no Fixed cost for none of the firms. b) Using data from the table below, explain the merger paradox when firms 2 and 3 merge. How the merged firm (firm 2 and 3) will be worse off? c) How would this outcome differ if all three firms merged?

A market has the following demand function: P = 120 - where Qe = E-1 Qi a) Assuming Cournot-Nash market, fill in the table below when firm one has MC, = 10, firm two has MC, = 20 and firm three has MC, = 20. Additionally, there is no Fixed cost for none of the firms. b) Using data from the table below, explain the merger paradox when firms 2 and 3 merge. How the merged firm (firm 2 and 3) will be worse off? c) How would this outcome differ if all three firms merged?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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