Calculate competitive equilibrium quantity, Macroeconomics

Assignment Help:

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?

 


Related Discussions:- Calculate competitive equilibrium quantity

Determine the long-term direct investment flows, Determine the Long-term di...

Determine the Long-term direct investment flows Long-term direct investment flows are when investors buy physical assets like land or capital equipment in another nation. This

Fiscal policy and budget, Fiscal policy is the program of government’s with...

Fiscal policy is the program of government’s with respect to the amount and composition of (i) expenditure: the purchase of commodities and services, and spending in the form of su

Explain the long-run phillips curve, Q. Explain the long-run Phillips curve...

Q. Explain the long-run Phillips curve? The long-run Phillips curve The augmented Phillips curve has an important consequence: the long-run Phillips curve must be vertical

Determination of all endogenous variables, Determination of all endogenous ...

Determination of all endogenous variables  We can explain how all the endogenous variables are determined in below figure:  Figure: The Keynesian model with the Phillips c

Calculating interest rates on a yearly basis, Calculating interest rates on...

Calculating interest rates on a yearly basis If the maturity is different from one year, the interest rate is usually recalculated to a corresponding one year rate. For example

What is this volume in acre-feet, 1. Lake Kickapoo, TX, is approximately 12...

1. Lake Kickapoo, TX, is approximately 12 km in length by 2.5 km in width. The inflow for the month of April is 3.26 m3/s and the outflow is 2.93 m3/s. The total monthly precipitat

Same Basket of Goods, assume the cost of a market basket in 2008 is 1717.0....

assume the cost of a market basket in 2008 is 1717.0. Calculate the cost of the same basket of goods and services in 2007. Price index in 2008 was 100 and price index in 2007 was

Average price of a textbook, The demand for textbooks is Q=200-P+25U-50Pbee...

The demand for textbooks is Q=200-P+25U-50Pbeer. Assume that the unemployment rate U is 8 and the price of beer P beer is $2. When the average price of a textbook is P=$100, the el

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd