CONNECT F/MICROECONOMICS
21st Edition
ISBN: 2810022151240
Author: McConnell
Publisher: MCG
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Chapter 21, Problem 5DQ
To determine
Economies of scale and merger of firms.
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- 18. Answer the next question based on the payoff matrix for a two-firm oligopoly where the numbers represent the firms' respective profits given each of their pricing strategies: FIRM Y O $ 800,000 O $1,000,000 O $1,450,000 Strategies: High-price If both firms collude to maximize joint profits, O $1,250,000 FIRM X High-price X = $625,000 Y = $625,000 Low-price X = $275,000 Y = $725,000 Low Price X = $725,000 Y = $275,000 X = $400,000 Y = $400,000 tal profits for the two firms will be:arrow_forwardConsider a market with 3 Cournot firms producing a homogeneous product. Consumer demand is given by P = 130 - Q. Each firm's total costs are given by C = f + 10g, where f represents fixed costs. Suppose that firms 1 and 2 merge and that after the merger, the merged firm has fixed costsof af with 1 < a< 2. Under which condition is this merger %3D profitable for the merging firms? O a. a< 2- 200/f O b. None of the options given are correct Oc a<2- 100/f O d. a <2- 150/f O e. a<2- 50/farrow_forwardFill in the columns in the following table. (Enter your responses as whole numbers.) TFC TVC $5 $0 5 3 q 0 1 2 3 4 5 5 5 5 5 5 5 9 16 25 36 ԼՈ MC P = MR $5 5 5 5 S LO 5 40 5 5 TR $0 TC $5 Profit $-5arrow_forward
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