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Consider a homogenous good industry with four firms. Totaldemand is given by \( D(p)=100-p \)....

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Economics

Consider a homogenous good industry with four firms. Totaldemand is given by \( D(p)=100-p \). The variable (=marginal) costof each of the firms is \( c 1=15, c 2=25, c 3=35 \) and \( c 4=40\). Firms compete in prices. Suppose firms 1 and 2 merge into oneentity and produce with a marginal cost of 10. Which of thefollowing statements is correct? After the merger, the price in theindustry increases by \( \$ 10 \) and the profit of the mergedentity is 1650 . None of the given answers. After the merger, theprice in the industry increases by \$15 and the profit of themerged entity is 1650 . After the merger, the price in the industryincreases by \$15 and the profit of the merged entity is 975 .After the merger, the price in the industry increases by \$10 andthe profit of the merged entity is 975 .

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