Consider a vertical market with one manufacturer and one retailer. Market demand is P = 400 - Q, marginal cost to the manufacturer is $25 per-unit, and marginal cost to the retailer is $10 per-unit plus $m per-unit that is paid to the manufacturer. What will be the prices in this market?

QUESTION 3 Consider a vertical market with one manufacturer and one retailer. Market demand is P = 400 - Q, marginal cost to the manufacturer is $25 per-unit, and marginal cost to the retailer is $10 per-unit plus $m per-unit that is paid to the manufacturer. What will be the prices in this market? O m = $25; P = $35 O m = $207.50; P = $308.75 O m = $217.50; P = $35 O m = $25; P = $217.50 QUESTION 4 Consider the same vertical market but now the manufacturer and retailer have merged into a single firm that both makes and sells the product. What will be the market price in this market? O P = $308.75 O P = $35 O P = $217.50 O P = $207.50 QUESTION 5 A vertical merger is expected to improve on the double marginalization outcome by: O increasing consumer surplus by more than the reduction in firm profit. O increasing the market price while also increasing production levels. O lowering market price while increasing production, and the production effect wins out. O increasing market price while lowering production, and the price effect wins out. QUESTION 6 Vertical mergers may be efficient if they: O raise consumer surplus by lowering firm profits O raise firm profits by lowering consumer surplus O raise both firm profits and consumer surplus O lower both firms profits and consumer surplus