Is it probable that the earnings of the new corporation will be greater than the aggregate earnings of the five plants, if the price of the product is not increased? If so, how will this increase be gained?
If there is an increase in earnings, how will the price of each of the three kinds of securities of the corporation be affected?
17. Suppose that the effective demand for a certain kind of goods in the country as a whole will vary in the following manner with the price changes indicated:
| $1.00 | 1,000,000 units |
| 1.10 | 900,000 units |
| 1.20 | 800,000 units |
| 1.30 | 700,000 units |
| 1.40 | 600,000 units |
| 1.50 | 500,000 units |
| 1.60 | 400,000 units |
| 1.70 | 300,000 units |
| 1.80 | 200,000 units |
There are ten companies each producing 100,000 units at a cost of 90 cents (including all costs but an allowance for dividends on investment) this giving just enough of a margin to each company to cause it to continue in the industry. What immediate effect on prices could a combination consisting of six firms have, assuming that the cost per unit of product and that the output of the independents remain unchanged? Show for each of the prices indicated what the amount of the margin made by the four independent competitors (altogether) and by the combination would be. What less immediate effects would be likely to follow, and why?
18. Is granting patents an interference with trade similar to tariffs?
19. Is it right that the lucky inventor of a popular toy should make $100 a day from it?
20. Is it right that an inventor should by patent laws be able to keep the profits of his business high?