Consider the situation where oligopolists collude in a market to maximise their potential profit. Suppose the...
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Consider the situation where oligopolists collude in a market to maximise their potential profit. Suppose the following chart shows the cost/revenue structure the oligopolists in this market face. P($) 15- 14- 13- 12- 11- MR. MC 100 200 300 400 500 ATC D Q (a) Identify the profit maximising price and output level for this oligopoly. Calculate the profit or loss that is being made in this market. (4 marks) (b) Is the profit or loss you calculated in Part (a) sustainable in the long run? Briefly explain why or why not. (3 marks) (c) Briefly compare an oligopoly market structure with that of monopoly. Does the monopolist face different cost/revenue curves to those shown in the chart, or are they the same? (3 marks) Consider the situation where oligopolists collude in a market to maximise their potential profit. Suppose the following chart shows the cost/revenue structure the oligopolists in this market face. P($) 15- 14- 13- 12- 11- MR. MC 100 200 300 400 500 ATC D Q (a) Identify the profit maximising price and output level for this oligopoly. Calculate the profit or loss that is being made in this market. (4 marks) (b) Is the profit or loss you calculated in Part (a) sustainable in the long run? Briefly explain why or why not. (3 marks) (c) Briefly compare an oligopoly market structure with that of monopoly. Does the monopolist face different cost/revenue curves to those shown in the chart, or are they the same? (3 marks)
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Answer rating: 100% (QA)
1 Identify the profitmaximizing price and output level The key to finding the profitmaximizing point is to remember that a firm will produce where marginal revenue MR equals marginal cost MCThis is th... View the full answer
Related Book For
Essentials of Business Analytics
ISBN: 978-1285187273
1st edition
Authors: Jeffrey Camm, James Cochran, Michael Fry, Jeffrey Ohlmann, David Anderson, Dennis Sweeney, Thomas Williams
Posted Date:
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