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Consider a market in which 5 firms that produce a homogeneous product compete by choosing prices. Market demand is given by D(p)=100-1p. The firms have

Consider a market in which 5 firms that produce a homogeneous product compete by choosing prices. Market demand is given by D(p)=100-1p. The firms have identical marginal cost of 22. Two firms are considering a merger which would result in a reduced marginal cost of 5 for the merged firm. What is the predicted change in the equilibrium price due to the merger?

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