In the upper part of the D, AR curve is more price elastic (sensitive to price changes) than the lower part. It is more price elastic because of the assumption that at the higher price, firms will not follow but at the lower price, other firms will cut prices too. Oligopoly Graph Usi...
The marginal cost curves of both scenarios will intersect the same quantity being produced by the oligopoly, represented by the vertical line in the graph; therefore, there is no change in quantity produced as prices are lowered, if the change in marginal cost is within the marginal revenue ...
Give two specific examples of behaviors of firms in the real world that cannot be easily explained by perfect competition. Provide an explanation for one of them assuming profit maximization. Do the firms in an oligopoly act independently or interdependently? Explain your ...