The following question relates to an oligopoly market where the industry demand curve is P = 100 - Q. What will industry output be at equilibrium in this model?
What will be an ideal response?
Since firm 2's reaction will be Q2 = 50 - .5Q1 we can solve reaction curve 2 for Q1 and set the two reaction curves equal to each other to find the equilibrium output which is 33 and 1/3 for each firm.
You might also like to view...
Positive economics is descriptive because:
A) it is based on ethical judgments. B) its predictions cannot be verified with data. C) it prescribes what an individual or society ought to do. D) it explains what has happened or predicts what will happen.
Explain the relationship between the interest rate on a bond and the default risk on a bond
What will be an ideal response?
Are advertising and brand names efficient?
What will be an ideal response?
______ occurs when voters look at the past performance of incumbent parties to decide how to vote in the current election.
A. Prospective voting B. Accountability C. Immobilism D. Retrospective voting