Question

Suppose that the only two firms in an industry face the market​ (inverse) demand curve p=160-q.Each has constant marginal cost equal to 16 and no fixed costs. Initially the two firms compete as Cournot rivals​ (Chapter 11) and each produces an output of 48.Why might these firms want to merge to form a​ monopoly? What reason would antitrust authorities have for opposing the​ merger?  ​(Hint​:Calculate​ price, profits, and total surplus before and after the​ merger.)Suppose that each firm has fixed​ costs, F, of ​$2, 000 that are avoidable if a firm does not produce.The firms would favor the merger because combined profit would increase by $__nothing and the​ profit-maximizing price would increase by $___nothing(Enter your response rounded to two decimal​ places.)Antitrust regulators might not oppose the merger​ because, although consumer surplus would decrease by $____nothing total surplus would increase by$___nothing Enter your response rounded to two decimal​ places.)