In a market, each firm has a marginal cost (MC) of $4, and the inverse demand fu
ID: 1187609 • Letter: I
Question
In a market, each firm has a marginal cost (MC) of $4, and the inverse demand function is given by: p=16-2Q. P= Market Price and Q=Total Market Quantity. Find Oligopoly market price and total quantity, (hint: assume two firms are operating in this market with the same MC = $4)Please show your all your steps. Thank you so much! In a market, each firm has a marginal cost (MC) of $4, and the inverse demand function is given by: p=16-2Q. P= Market Price and Q=Total Market Quantity. Find Oligopoly market price and total quantity, (hint: assume two firms are operating in this market with the same MC = $4)
Please show your all your steps. Thank you so much!
Explanation / Answer
In the case of oligopoly, the profits will be maximized when MC=MR
In the perfectly competitive market, profits will be maximized when MC=MR=P
So
p = 4$
4=16-2Q
Q = 6
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