Assuming Cournot-Nash market, fill in the table below when firm one has MC, = 10, firm two has MC2 = 20 and firm three has MC3 = 20. Additionally, there is no Fixed cost for none of the firms.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?How would this outcome differ if all three firms merged? A market has the following demand function:1P = 120where Qt = E-1 Qia) Assuming Cournot-Nash market, fill in the table below when firm one has MC, = 10,firm two has MC2= 20 and firm three has MC3 = 20. Additionally, there is no Fixed costfor none of the firms.[10 marks]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?[10 marks]c) How would this outcome differ if all three firms merged?[5 marks]Number ofFirmsIndustry levelOutputFirm levelPriceProfitsOutputProfits13

Answered: A market has the following demand…

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter15: Imperfect Competition

Section: Chapter Questions

Problem 15.7P

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Assuming Cournot-Nash market, fill in the table below when firm one has MC, = 10, firm two has MC2 = 20 and firm three has MC3 = 20. Additionally, there is no Fixed cost for none of the firms.

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?

How would this outcome differ if all three firms merged?

A market has the following demand function:
1
P = 120
where Qt = E-1 Qi
a) Assuming Cournot-Nash market, fill in the table below when firm one has MC, = 10,
firm two has MC2
= 20 and firm three has MC3 = 20. Additionally, there is no Fixed cost
for none of the firms.
[10 marks]
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?
[10 marks]
c) How would this outcome differ if all three firms merged?
[5 marks]
Number of
Firms
Industry level
Output
Firm level
Price
Profits
Output
Profits
1
3

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