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I require some help with the attached regarding economies of scale

4. Read the following excerpt and answer the following questions. CSR and Borai have announced the intention to font: a joint venture ofAustraiian east coast brick operations, citing reduced brick usage as a major cause for consolidation.
The companies have proposed to combine brick operations in New South Waies, Victoria, Queensland, South Austraiia, Tasmania and theAC'l': The move is subject to
clearance by the Australian Competition and Consumer Commission (AC C C). Ajoint statement from the companies expiains brick demand in Australia has experienced a
sustained structural decline, with bricks becoming an increasirtgiy smalier component of the broader ciadding market. Despite a general increase in construction activity over this period total brick production in Amtraiia has flailen by 46 per cent Rom its peak in ms t, according to Borai and CSR. David Wheeidon a. Using the concept of economies of scale to explain the two companies’ argument that it is now necessary for CSR and floral to merge. Forthis question assume
that CSR and Boral are the only two companies in the marketand form an oligopoly (Hint: think about the cost curves and the market demand curve]? Agraph is
likely to be helpful in explaining this question. b. If the joint venture is allowed to proceed, how would you describe the new market? What would be the impact on pricer quantity and profit? Explain. c. If the government allows the merger to go ahead two options are available for regulating the price. What are the two options and which would be the better option? Explai

 


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