Equilibrium and Profits

Equilibrium and Profits - result of this the firm expects...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Equilibrium and Profits: When the product is differentiated an individual firm has some capacity to influence market conditions. It can exert a degree of control over price and output sold. Equilibrium of a firm has been explained in Figure 50. In the figure, we notice two demand curves dd and DD which need some explanation. Both are demand or average revenue curves. They differ in certain respects which are as follows: i) dd is the demand curve of a firm which differentiates its product. As a
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: result of this the firm expects to sell a larger quantity. The dd curve is flatter and more flexible. However, the firms expectations may not be fulfilled. ii) In the market the firm faces competition from its rivals. Its actual share in the market is smaller than what it had expected. Such a market share of the firm is shown by the DD curve. This curve is steeper and less flexible....
View Full Document

Page1 / 2

Equilibrium and Profits - result of this the firm expects...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online