To examine the trade-off between market efficiency and market power from a merger, consider a market with two firms that sell identical products. Firm 1 has a constant marginal cost of $, and Firm 2 has a constant marginal cost of $2. The market demand is Qp= 105-p.

Note that

dπ1/∂q1= [105-1(q1+q2)]- 1q1-1=0

dπ2/∂q2= [105-1(q1+q2)]- 1q1-2=0

The Cournot-Nash equilibrium occurs where q1 = 15.00 and q= 12.00. Market output is 69. Futhermore , the equilibrium occurs at a price of $--

 units

units

Market output  =  69

The equilibrium occurs at Price = $36

Step-by-step explanation:

Given that:

By Solving (1) and (2):

Using elimination method: Multiply

    ---- (1)

    ---- (2)

(multiply equation (2) by 2 )

units

From (1):

 units

Market output  = (34 + 35 ) units

Market output  =  69

The equilibrium occurs at Price = 105 - 69

The equilibrium occurs at Price = $36

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step-by-step explanation:

step-by-step explanation:

mean or average is 40.6