Determining profit in pre and post merger

Reference no: EM1370025

The market for a standard-sized cardboard container comprises two firms: BooBox and Flimflax. As manager of BooBox you enjoy patented technology which permits your company to produce boxes faster and at lower cost than Flimflax. You use this advantage to be first to choose profit-maximizing output level in the market.

The inverse demand function for boxes is P = 800 - 4Q, BooBox's costs are TCb = 40Qb ( where TCb BooBox's costs, Qb, BooBox's Q), and Flimflax's costs are TCf = 80Qf (where TCf Flimflax's costs, Qf , Flimflax's Q). Ignoring antitrust considerations, would it be profitable for your firm to merger with Flimflax and act as one firm? If not, explain why not.

Reference no: EM1370025

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