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Since P>MC for an oligopoly, the output effect is that selling one more unit at the sales price will increase profit.
The price effect is that an increase in production will increase the total amount sold, which will decrease the price and decrease the profit on all other units sold.
- If the output effect is greater than the price effect, the owner will increase production.
- If the price effect is greater than the output effect, the owner will not increase production (and may even decrease production).
- Oligopolists will continue to increase or decrease production until these marginal effects balance.
What else can I help you with?
Price and output determination under oligopoly?
Explain how price and output decision are taken under conditions of oligopoly.
What are characteristics of oligopoly?
An oligopoly is characterized by a market with a few firms having a negligible effect on price.
What is the price elasticity in a oligopoly?
in oligopoly what is the nature of price elasticity
How do firms in an oligopoly structure strategize their pricing and output decisions to achieve profit maximization?
Firms in an oligopoly structure strategize their pricing and output decisions by considering the actions of their competitors. They may engage in price leadership, collusion, or non-price competition to maximize profits. By closely monitoring market conditions and their rivals' behavior, oligopoly firms aim to set prices and output levels that will maximize their profits while maintaining a competitive edge in the market.
Price wars are prima facie evidence of what economic market?
Oligopoly
Price and output determination under oligopoly?
Explain how price and output decision are taken under conditions of oligopoly.
What are characteristics of oligopoly?
An oligopoly is characterized by a market with a few firms having a negligible effect on price.
What is the price elasticity in a oligopoly?
in oligopoly what is the nature of price elasticity
How do firms in an oligopoly structure strategize their pricing and output decisions to achieve profit maximization?
Firms in an oligopoly structure strategize their pricing and output decisions by considering the actions of their competitors. They may engage in price leadership, collusion, or non-price competition to maximize profits. By closely monitoring market conditions and their rivals' behavior, oligopoly firms aim to set prices and output levels that will maximize their profits while maintaining a competitive edge in the market.
Price wars are prima facie evidence of what economic market?
Oligopoly
What are the types of oligopoly?
Oligopoly is a market from where large numbers of buyers contact few sellers for the purpose of buying and selling things. The different types are a pure oligopoly, a differentiated oligopoly, a collusive oligopoly, and a non-collusive oligopoly.
Difference between collusive and non-collusive oligopoly?
If in an oligopoly market, the firms compete with each other, it is called a non-collusive, or non-cooperative oligopoly. If the firm cooperate with each other in determining price or output or both, it is called collusive oligopoly, or cooperative oligopoly. Collusive oligopoly exists when the firms in an Oligopolistic market charge the same prices for their products, in affect acting as a monopoly but dividing any profits that they make. Non collusive oligopoly exists when the firms in an oligopoly do not collude and so have to be very aware of the reactions of other firms when making price decisions.
What is the definition of collusive oligopoly?
Collusive oligopoly is an industry that only contains few producers (oligopoly), in which producers agree among one another as to pricing of output and allocation of output markets among themselves. Cartel, such as OPEC, are collusive oligopolies.
Non-price competition tends to be a consequence of which market structure?
Oligopoly
How a firm reaches the equilibrium when output is given and when cost is given?
must be smaller thean the price effect
What are the characteristics of oligopoly phenomenon?
Oligopoly is characterized by a market structure in which a small number of firms dominate the industry, leading to interdependent pricing and output decisions. Firms in an oligopoly often produce similar or differentiated products, which can result in collaborative behavior, such as price-fixing or forming cartels. High barriers to entry prevent new competitors from easily entering the market, maintaining the dominant firms' market power. Additionally, oligopolistic markets can exhibit price rigidity, where prices remain stable despite changes in demand.
What is the meaning of the word oligopoly?
An oligopoly is an intermediate market structure between the extremes of perfect competition and monopoly. Oligopoly firms might compete (noncooperative oligopoly) or cooperate (cooperative oligopoly) in the Marketplace.
