Two firms, A and B, produce identical product (crude oil, for instance) have the same cost curves shown on the left figure below. Their production levels are able to meet the demand curve of the whole market shown on the right figure below. The lowest point of ATC curve can be achieved with a quantity of 5 units (a unit can be 1 million tons, for instance), and the corresponding ATC = 20 units. The demand curve of the market has a slope of -3.5, so the prices are 27 and 34 when the quantities are 8 and 6, respectively. MC АТС Demand Curve 34 34 30 27 27 20 Q 3 5 6 8 10 This is a market structure called [a] (fill in the blank with one of the terms: monopoly, monopolistic competition, legal duopoly, natural duopoly). 20
Two firms, A and B, produce identical product (crude oil, for instance) have the same cost curves shown on the left figure below. Their production levels are able to meet the demand curve of the whole market shown on the right figure below. The lowest point of ATC curve can be achieved with a quantity of 5 units (a unit can be 1 million tons, for instance), and the corresponding ATC = 20 units. The demand curve of the market has a slope of -3.5, so the prices are 27 and 34 when the quantities are 8 and 6, respectively. MC АТС Demand Curve 34 34 30 27 27 20 Q 3 5 6 8 10 This is a market structure called [a] (fill in the blank with one of the terms: monopoly, monopolistic competition, legal duopoly, natural duopoly). 20
Chapter19: Externalities And Public Goods
Section: Chapter Questions
Problem 19.1P: A firm in a perfectly competitive industry has patented a newprocess for making widgets. The new...
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