Solution-How does the merger affect markups and profits

How does the merger affect markups and profits

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Reference no: EM133128041

Two dermatologist practices want to merge. The price elasticity of demand for dermatology services is -0.35. Firm 1 has a volume of 7,500, fixed costs of $70,000, marginal costs of $20, and a market share of 8%. Firm 2 has a volume of 15,600, fixed costs of $65,000, marginal costs of $20, and a market share of 12 percent. The merged firm will have a volume of 21,500, fixed costs of $95,000, marginal costs of $20, and a market share of 20%.

What are the total costs, prices, revenues, and profits for each firm and for the merged firm, respectively?

How does the merger affect markups and profits?

Reference no: EM133128041

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How does the merger affect markups and profits

Reference no: EM133128041

Reference no: EM133128041

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