Q3. A dominant rm has a marginal cost of 10 and no xed costs (so, average costs are also 10). Total demand for the product is represented by p = 100 qd. As a group, fringe rms have a marginal cost of 10 + qf, where q; is the 'inge quantity supplied. a. For some price p set by the dominant rm, what is the residual demand? (Hint: For this part, worry about the kinked part of the curve, but later you won't have to.) b. For any p Z 10, what is the marginal revenue faced by the dominant rm? c. What is the prot-maximizing price-quantity combination for the dominant rm? d. Assuming no signicant barriers to entry, what will happen to the fringe supply over time? Residual demand? The dominant rm's prot? Q4 Firms in an industry that is currently competitive are considering a horizontal merger. They currently have a constant marginal cost of 20, no other costs, and demand can be written as p = 200 q. The worry is that the industry will end up behaving like a monopoly. The rms' lobbyist says \"Maybe that's true, but marginal costs will go way down to 10!\" a. Name one reason why marginal costs might go down to 10, and one reason (other than maybe they're lying) that marginal costs might not go down as much as they expect. b. Calculate the total surplus in the current scenario (competitive, high cost) and the proposed merger scenario (monopoly, low cost). Will the merger increase or decrease total surplus