Two hospitals want to merge the price elasticity of demand, Ask an Expert

Economics

Two hospitals want to merge. The price elasticity of demand is 0.20, and each clinic has fixed costs of $100,000. One clinic has a volume of 9,200, marginal costs of $70, and a market share of 3 percent. The other clinic has a volume of 15,800, marginal costs of $80, and a market share of 6 percent. The merged firm would have a volume of 18,000, fixed costs of $80,000, marginal costs of $60, and a market share of 6 percent.

What are the total costs, revenues, and profits for each clinic and the merged firm? How does the merger affect markups and profits?

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91678214

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