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4. [10 MARKS] Consider a standard Cournot model with 26 firms. The inverse demand is P = 400 - 2Q and every firm's cost of

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4. [10 MARKS] Consider a standard Cournot model with 26 firms. The inverse demand is P = 400 - 2Q and every firm's cost of producing a quantity q is 40q. (a) [5 MARKS] What is the minimum number of firms that need to merge for the merger to be profitable? (b) [5 MARKS] Suppose that a number of firms equal to what you found in (a) merge. How much profit does the merger generate for the firms involved? Note: If you did not find an answer in (a), use 24. 5 130 MARKSI T

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