Two clinics want to merge. The price elasticity of demand is -0.20, and each clinic has fixed costs of $50,000. One clinic has a volume of 7,200, and marginal costs of $50, and a market share of 2 percent. The other clinic has a volume of 10,800, marginal costs of $50, and a market share of 4 percent. The merged firm would have a volume of 18,000, fixed costs of $70,000, marginal costs of $50, and a market share of 6 percent.
A) what are the total costs, revenues, and profits for each clinic and the merged firm?
B) how does the merger affect markups and proftis?