Find the equilibrium quantities-price and profits

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Consider an industry with two firms each selling a homogeneous good and producing at MC1 = 10 and MC2 = 40. Industry demand is given by P = 100 – Q. Competition in the market place is in quantities (Cournot competition). a. Find the equilibrium quantities, price and profits. b. Consider now a proposed merger between the two firms, resulting in a monopoly producing at MC = 10. Find the post-merger equilibrium quantities, price and profit. c. Would Competition Bureau approve the proposed merger or reject it? Provide an economic analysis to support your answer and illustrate it by a diagram.

Reference no: EM13985985

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