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.
Explain how price and output decision are taken under conditions of oligopoly.
An oligopoly is characterized by a market with a few firms having a negligible effect on price.
in oligopoly what is the nature of price elasticity
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.
Oligopoly
Explain how price and output decision are taken under conditions of oligopoly.
An oligopoly is characterized by a market with a few firms having a negligible effect on price.
in oligopoly what is the nature of price elasticity
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.
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.
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.
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.
Oligopoly
must be smaller thean the price effect
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.
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.