Consider a market of 6 firms that compete through production. Demand is given as P = 220 - 2Q. Each firm has a marginal cost of $20.

a. What will be the equilibrium firm quantities, market price, and firm profits?

b. Suppose two firms merge in this market to become a leader. What will be the new equilibrium firm quantities, market price, and firm profits? Was it profitable for the firms to merge into a leader? Note that n = 5 after the merger.

c. Suppose another two firms merge to form a second leader in the market. What will be the new equilibrium firm quantities, market price, and firm profits? Was it profitable for the followers to merge into a co-leader? Note that n = 4 and L = 2 after the merger: