[ECON 1B03] - Final Exam Guide - Ultimate 98 pages long Study Guide!
1 Dec 2016
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ECON 1B03 Full Course Notes
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Another case of imperfect competition: oligopoly an oligopoly has: 1. few sellers, usually big firms: homogeneous or nearly identical products. 3. interdependent firms: one firm"s decisions affect another firm"s decisions, they don"t act alone or independently of one another examples: big oil companies, soft drink market a duopoly is an oligopoly with only two members. Mike and jane are the only two producers of clean drinking water in cayuga. Every saturday they pump water at no cost to them (no average cost, marginal cost, etc. ), and sell it to meet the following demand schedule: profit = tr tc, but no tc, so profit = tr. Downward sloping demand curve (compared to horizontal perfectly elastic demand curve with perf competition due to being price takers, these people are not) Profit is maximized at q = 60, p=60, and tr = 3600. The price and quantity in a monopoly market would be where total profit is maximized:
