Now assume that each firm incurs fixedcosts ofFin addition to the variable costsnoted above. When two firms

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Now assume that each firm incurs fixedcosts ofFin addition to the variable costsnoted above. When two firms merge themerged firm has fixed costs ofbFwhere1b2.a. Suppose that firms 1 and 2 merge andthat>0. Derive a condition onb, F,andfor this merger to be profitable.Give an intuitive interpretation of thiscondition

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Now assume that each firm incurs fixedcosts ofFin addition to the variable costsnoted above. When two firms

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