(A) Suppose that the two firms merge. Write down the profit function of the merged firm. Calculate the profit maximizing level of output, the amount of pollution for the merged firm, and its profit. Is the merger Pareto improvement? Why or why not? (B) Suppose that the merger is forbidden by the government. Instead, now

(A) Suppose that the two firms merge. Write down the profit function of the merged firm. Calculate the profit maximizing level of output, the amount of pollution for the merged firm, and its profit. Is the merger Pareto improvement? Why or why not? (B) Suppose that the merger is forbidden by the government. Instead, now

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter28: Antitrust And Regulation

Section: Chapter Questions

Problem 7E

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Consider the market for Atlantic salmon. Petuna, Tasmania’s smallest salmon farm, and Huon Aquaculture, a large corporate supplier, are both producers of Atlantic salmon. The marginal cost curves for both firms are shown in the graph below: If the market price is $13 per kilo of salmon, how many kilos of salmon would Petuna supply? What about Huon Aquaculture? How many total kilos would they collectively supply? Is this allocation the most productively efficient way to produce this quantity of salmon? i will give thumbs up thanks
Based on market research, a film production company in Ectenian obtains the following information about the demand and production costs of its new DVD:Demand: P = 1,000 – 10QTotal Revenue: TR = 1,000Q – 10Q2Marginal Revenue: MR = 1,000 – 20QMarginal Cost: MC = 100 + 10Qwhere Q indicates the number of copies sold and P is the price in Ectenian dollars.d. Suppose, in addition to the costs above, the director of the film has to be paid. The company is considering four options:i. A flat fee of 2,000 Ectenian dollarsii. 50 percent of the profitsiii. 150 Ectenian dollars per unit soldiv. 50 percent of the revenueFor each option, calculate the profit-maximizing price and quantity. Which, if any, of these compensation schemes would alter the deadweight loss from monopoly? Explain
8. a) Suppose a firm A produces a product q, but also pollution x that affects a second firm B. Firm A is a competitive firm and faces an equilibrium price of £12 for its product. The cost function of firm A is C (q,x) = q² + (x-4)2. Firm B is a competitive firm and faces an equilibrium price of £10. Firm B's cost function is C (r,x) = r². + xr. Compute the equilibrium prices and quantities and the profits of the two separate, competitive firms. Interpret the first order conditions. Explain. b) Compute the social optimum, that is, the equilibrium prices, quantities, and profit when firm A and B are merged. Interpret the conditions and compare it to the solution in (a). Explain.
Suppose a firm A produces a product q, but also pollution x that affects a second firm B. Firm A is a competitive firm and faces an equilibrium price of £12 for its product. The cost function of firm A is Ca (q,x) = q^2 + (x - 4)^2. Firm B is a competitive firm and faces an equilibrium price of £10. Firm B’s cost function is Cb (r,x) = r^2 + xr. A. Compute the equilibrium prices and quantities and the profits of the two separate, competitive firms. Interpret the first order conditions. Explain. b) Compute the social optimum, that is, the equilibrium prices, quantities, and profit when firm A and B are merged. Interpret the conditions and compare it to the solution in (a). Explain. c) Devise a quantity tax on product q for firm A in (a) such that the government can restore the social optimum in (b).
Suppose a firm A produces a product q, but also pollution x that affects a second firm B. Firm A is a competitive firm and faces an equilibrium price of £12 for its product. The cost function of firm A is CA (q,x) = q^2 + (x - 4)^2 . Firm B is a competitive firm and faces an equilibrium price of £10. Firm B’s cost function is CB (r,x) = r^2 + xr. A. Compute the equilibrium prices and quantities and the profits of the two separate, competitive firms. Interpret the first order conditions. Explain.
a) Suppose a firm A produces a product q, but also pollution x that affects a second firm B. Firm A is a competitive firm and faces an equilibrium price of £12 for its product. The cost function of firm A is CA(q,x) = q2 + (x − 4)2. Firm B is a competitive firm and faces an equilibrium price of £10. Firm B’s cost function is CB(r,x) = r2 + xr. Compute the equilibrium prices and quantities and the profits of the two separate, competitive firms. Interpret the first order conditions. Explain. b) Compute the social optimum, that is, the equilibrium prices, quantities, and profit when firm A and B are merged. Interpret the conditions and compare it to the solution in (a). Explain. c)Devise a quantity tax on product q for firm A in (a) such that the government can restore the social optimum in (b).
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Suppose a firm A produces a product q, but also pollution x that affects a second firm B. Firm A is a competitive firm and faces an equilibrium price of £12 for its product. The cost function of firm A is . Firm B is a competitive firm and faces an equilibrium price of £10. Firm B’s cost function is . A. Compute the equilibrium prices and quantities and the profits of the two separate, competitive firms. Interpret the first order conditions. Explain. b) Compute the social optimum, that is, the equilibrium prices, quantities, and profit when firm A and B are merged. Interpret the conditions and compare it to the solution in (a). Explain. c) Devise a quantity tax on product q for firm A in (a) such that the government can restore the social optimum in (b).
A microbrewery operates next to the Bushville Lake and uses water from the lake during production. The marginal cost of beer production is: MC = 8 + 2Q where Q is the quantity of beer produced (keg). The brewery sells its output at a market price of $40/keg. Because the industry is perfectly competitive, the brewery’s action does not affect the market price. The Bushville Lake is also used for kayaking and recreational fishing, but pollution from the brewery reduces the quantity of fish available and makes the lake very unpleasant. Each keg of beer produced emits a pound of pollutants that causes a loss of recreation opportunities worth $3. a) How much beer will be produced? b) What is the efficient level of beer production? If the government used a Pigouvian tax to achieve this goal, what would the tax be?
Please answer part c and provide steps
Suppose that wine industry has very strong external increasing return to scales (IRS). France is the only country producing wine now, and France's average production cost of producing wine reflecting its external IRS can be written as 20 ACF (x) = 1+ x The global demand of wine can be written as D = 20 – 10x. Assume that Korea's average cost of producing wine is written as АСк (х) 1+ x If a Korean firm starts producing wine, what would be the global wine consumption in the equi- librium? Use a diagram to explain your answer. Your diagram should include the values for y- or x- axes, and intersection point(s) if needed.
It's on the picture.