1.Consider a homogenous good industry with four firms. Total demand is given by D(p)=200-p. The variable (=marginal) cost of each of the firms is c1=10, c2=20, c3=30 and c4=35. Firms compete in prices.Suppose firms 1 and 2 merge into one entity and produce with a marginal cost of 20. Which of the following statements is correct?

After the merger, the price in the industry increases by $20.

After the merger, the price in the industry decreases by $10.

After the merger, the price in the industry increases by $10.

After the merger, the price in the industry decreases by $20.