There are two firms in an industry, each owning one plant. Firm 1 has supply function P = 10 + 0.01Q1 (which is the marginal cost of its plant), and Firm 2 has supply function 0.005Q2 + 0.00001Q22 (the marginal cost of its plant).
A draw the market supply curve
B if the demand curve is 200 - 0.005Q, what is the pure competition equilibrium? What is the consumer surplus, total producer surplus, and total social welfare? What is the amount that each firm produces, and each firm's profit and marginal cost?
c imagine that the two firms merge into one firm, and then act as a monopoly (setting the price at the profit maximizing level)? Calculate the marginal revenue for the joint firm, price, and the marginal cost for each plant. What then are the consumer surplus, total producer surplus, and total social welfare?