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The market demand in an industry is P= 200-Q. (Note: The answer to this question must be hand-written.)
A) The industry is currently performing competitively with price equal to marginal cost. If, LRMC=LRAC=10, what is the output and price?
B) Suppose a series of mergers monopolizes the industry and results in lower costs such that LRMC = LRAC = 5 (the demand stays the same). What are the industry output and price?
C) Does this merger improve the total welfare to society? Please show all your work for full credit.
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