If there are two firms, Reach and Dorne, the reaction curve of Dorne plots Dorne’s profit-maximizing output given different output levels of Reach and vice versa. As shown in the graph below, the Cournot equilibrium is the point of intersection of both reaction curves. ...
Oligopoly Graph Using the profit maximization rule, Marginal Cost = Marginal Revenue, anywhere on the vertical MC curve works. The price and quantity don’t change regardless of cost. Price remains at P* and output Q*, even at MC Upper or MC Lower. Example 3: Competing excluding price Olig...
What would be an example of a graph showing firm earning and economic profit in a monopoly market structure? Explain what is going on in a few sentences from viewing the monopoly market structure gra How is the oligopoly different than a monopoly? Which is the bett...
Next, we graph these functions, with q2 on the vertical axis and q1 on the horizontal axis. They are called best-reply (or sometimes best2 ? ? Notice that the second-order condition of profit maximization holds, because the second derivative of the profit function for each firm is -2b <...