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Unformatted text preview: ce to charge.
– For example the activity where you decided to price high or low.
– Once each firms has picked a price, how much quantity they produce in total is dependent on the industry demand curve. 13 Cournot Oligopoly
Cournot Oligopoly A Cournot Oligopoly exists when firms choose the amount of quantity to produce. – For example the game on the previous slide.
– Once each firm has picked their quantity they are going to produce, the industry price is determined by the industry demand curve. 14 How to tell what kind of market you have: The type of market (competitive, monopolist or oligopoly) is dependent on how much market power firms have.
Market power is the ability to set the price of the output above marginal cost.
– The higher the market power, the higher the price. To determine the type of market, we evaluate the market power of firms in the market by evaluating firm’s percentage of market sales.
15 How to tell what kind of market you have: There exists many types of measuring techniques and ratios to determine market type. One is the Four...
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- Spring '14