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

Define price elasticity of demand, Suppose the price elasticity of demand f...

Suppose the price elasticity of demand for used cars is estimated to be 3 what does this mean?

Abnormal profits, explain the terms abnormal profits and normal profits

explain the terms abnormal profits and normal profits

Time inconsistency of monetary policy, I will need to upload a file as the ...

I will need to upload a file as the questions are bit too long to type

What is bowed-out shape, Why does a production possibilities frontier with ...

Why does a production possibilities frontier with increasing opportunity costs have a bowed-out shape?   The curve is bowed-out because some resources are better suited for the

Four different measures of GDP, Four different measures of GDP Using ci...

Four different measures of GDP Using circular flow model we see that there are 4 equivalent ways of measuring GDP:  Using the definition: market value of all finished goo

Index numbers of production, INDEX NUMBERS OF PRODUCTION  Among the com...

INDEX NUMBERS OF PRODUCTION  Among the commonly used economic indicators to monitor current trends in the economy are indices of production. The main aggregative indices used t

Regression analysis, Regression Analysis This is a statistical tool whi...

Regression Analysis This is a statistical tool which is used to discern the relationship among a dependent variable as like sales to one or more independent variables like adve

Equilibrium quantity of widgets, Use the model in the tax incidence applica...

Use the model in the tax incidence application to determine the effect of a given change in the tax on widget, change in T, on the equilibrium quantity of widgets. How does your an

Liberalisation and changing sources of fdi, Liberalisation and Changing Sou...

Liberalisation and Changing Sources of FDI: European countries  had been major sources of FDI inflows  to India until 1990. However, their relative importance declined in the

Impact of minimum wage law, Minimum wage laws are common in many countries....

Minimum wage laws are common in many countries. The debate over minimum wage includes claims about the impact of this action on employment levels and wage levels. What impact does

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