Calculate competitive equilibrium quantity, Macroeconomics

Assume a competitive industry with two hospitals. The hospitals compete in price (such that P=MC), face the inverse demand curve =10 - Q , and have a constant marginal cost of $5.

a) What is the competitive equilibrium quantity? What is the consumer surplus?

b) Now assume that the two hospitals merge, and their marginal cost falls to $4. What is the new quantity provided? What is the price to consumers? What is the consumer surplus?

c) What is the amount of the transfer from consumers to producers when the hospitals merged?

d) What are the efficiency gains from the merger?

e) The government challenges the merger. Should the courts allow the merger to proceed if only consumer surplus matters? Why or why not?

f) Should the courts allow the merger to proceed if considering total welfare (i.e. consumer surplus + producer surplus)? Why or why not?


Posted Date: 3/1/2013 5:15:01 AM | Location : United States

Related Discussions:- Calculate competitive equilibrium quantity, Assignment Help, Ask Question on Calculate competitive equilibrium quantity, Get Answer, Expert's Help, Calculate competitive equilibrium quantity Discussions

Write discussion on Calculate competitive equilibrium quantity
Your posts are moderated
Related Questions
RELATIONSHIP WITH 8 VARIANTS OF NATIONAL PRODUCT AGGREGATES  We have shown the distinction between national product at market prices and national product at factor cost, based

A public good: A) Generally results in substantial negative externalities. B) Can never be provided by a nongovernmental organization. C) Costs essentially nothing to prod

Overnight target rates and inflation One of the major targets of every central bank is a low and stable inflation. Its main control variable is the overnight interest rate tar

Using Simple Keynesian Model, discuss the effect of the following: a) An increase in govt. expenditure. b) A decrease in lump sum taxes. In this context compare the govt.

What is this underlined phrase above referring to in the chapter lecture? Select one: a. Physical capital b. Social capital c. Human capital d. Entrepreneurship e. Growth com

discuss the different of cost?draw the cost curves

Differences between absolute advantage and comparative advantage?              Ans) Absolute benefit and comparative benefit are two basic concepts to international trade. Under

Because the structure of the personal income tax is progressive, a larger share of income is taxed at higher rates as real income increases. Therefore, economic growth automaticall

Goods in the circular flow If Y R is total value of all goods going from F R to F H , then total value added from all firms in the F R box is equal to Y R (they don't pu

What are the important tools to consider Monetary Policy? Important tools to consider Monetary Policy: a. What the money demand curve is b. Why the liquidity preference m