Consider a market with 3 firms and the following demand from consumers P = 110-Q. Each independent firm has the same fixed cost F but different constant marginal costs: c₁ = 5, c₂ = 5, and c3 = 4. There is no capacity constraint. (a) What is the market equilibrium of this oligopoly (prices, quantities, benefits, consumers surplus, total surplus)? (b) Consider that firms 2 and 3 merge. (Note that the merged firm, as each and every firm has a fixed cost of F.) What is the market equilibrium after the merger? (c) What are the consequences of such a merger? How does it depend on F?

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