jor characteristic of oligopolistic industries is dependent pricing decisions. z
ID: 1119442 • Letter: J
Question
jor characteristic of oligopolistic industries is dependent pricing decisions. zontal demand curves for the individual firms ce-taking firms. w or no economies of scale. MC ATC Firm Industry Refer to the graphs above for a perfectly competitive market in the short run. The graphs suggest that in the long run, assuming no changes in the given information: a. Some firms will exit from this industry b. More buyers will come to the market c. New firms will enter the industry d. Buyers will leave the industry 8 $20 MC AC $16 $14 $12 10 $8 $6 $2 $0 0 300 600700 Quantity per day 10. Refer to the graph above. If this monopolist sets the price to maximize profit, it will earn economic profit a. $ 1600 per day. b. $2,400 per day c. $4,800 per day. $7,200 per day.Explanation / Answer
9. c). New firms will enter the market. This is because the price level is greater than the Average cost, and thus new firms will keep entering the market until price goes down sufficiently for AC to be equal to Price.
10. Price chosen = 16, where MR= MC
Quantity chosen = 600
Revenue = 600 * 16 = 9600
Cost = AC * Quantity = 600*12 = 7200
Profits = Revenue - Cost = 2400 per day
Hence the answer is b.
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