Determine the minimum cost reduction required to approve the merger of two duopolistic firms. These two duopolistic firms have identical cost structure exhibiting a constant per unit cost and no fixed costs. Currently, each of the two firms produces an output= 10at a price= 40.

Based on an analytical report at your disposal, the socially efficient quantity in this industry is estimated to be equal to 30. According to this report, in a competitive industry the prevailing price would have been= 30.

1. Calculate the pre-merger average cost.
2. Calculate the slope and the vertical intercept of the demand curve.
3. Calculate the size of the social loss resulting from the merger.
4. Calculate the minimum cost reduction required for the merger approval.
5. Calculate the minimum cost reduction required for the merger approval if you must also include the damages resulting from the loss in consumer surplus.
6. Draw a graph