Oligopoly Question

Reillyman

Explain the relationship between the MR curve and the demand

curve?

Anyone? I know it's simple but for the life of me I can't put it down on paper.

Aisling x

Because the demand curve is kinked, the firm's MR curve consists of 2 parts and is constant between points d and e (or whatever is on your graph). Irrespective of what happens to costs the firm's revenue does not change. An increase in MC from MC1 to MC2 will not alter equilibrium output or price.

that is what i say anyway

Ashashi

Aisling x wrote: »

Because the demand curve is kinked, the firm's MR curve consists of 2 parts and is constant between points d and e (or whatever is on your graph). Irrespective of what happens to costs the firm's revenue does not change. An increase in MC from MC1 to MC2 will not alter equilibrium output or price.

that is what i say anyway

Perfect answer. I always leave out the constant part, always. Also, with the way these papers are going, maybe another shock is in store, don't just concentrate on Oligopoly, look at the other competitions as well.

Aisling x

the thought that oligopoly won't come up is quite disturbing...however probable it may be...
i'm not nearly as prepared for economics as i'd like to be...and after a tough accounting paper i'd be hoping for quite high marks in economics, to make up for it

Reillyman

Yeah don't worry I'm covering them all.

Another Q, Are Oligopolistic firms more likely to earn Normal Profit or SNP's in the Long-Run?

Professional Griefer

SNP's.
There is very little competition due to the barriers.
The market is dominated by very few firms, generally they practice non-price competition.
They also tent to collude.

Ashashi

Reillyman wrote: »

Yeah don't worry I'm covering them all.

Another Q, Are Oligopolistic firms more likely to earn Normal Profit or SNP's in the Long-Run?

More likely to earn SNP's in the lonf run due to barriers of entry, however in the short run, they can make a NP, or even a loss if they partake in limit pricing.

Finical

Anyone only doing Oligopoly and Perfect Competition like me?

Professional Griefer

Finical wrote: »

Anyone only doing Oligopoly and Perfect Competition like me?

I'm only gonna do Oligopoly. If it doesn't come up I'll just do another question. I couldn't really be bothered doing perfect. I know enough topics pretty well to cover myself in anyways. I hope theres a full question of Economics Development, love that topic

Finical

Ix Deadmau5 wrote: »

I'm only gonna do Oligopoly. If it doesn't come up I'll just do another question. I couldn't really be bothered doing perfect. I know enough topics pretty well to cover myself in anyways. I hope theres a full question of Economics Development, love that topic

I love that Economic Development part of the course aswell. Here's hoping we both get a full question on it, I think it will come up with Keynes or one of the others. I only know Keynes.

Wayne 91

Could anyone give me a solid definition for a cartel? I know its a collusive agreement or something along those lines, just cant find the exact definition, Cheers

FridaysWell

Wayne 91 wrote: »

Could anyone give me a solid definition for a cartel? I know its a collusive agreement or something along those lines, just cant find the exact definition, Cheers

A cartel is an association of independent producers who come together and agree on common policies regarding prices, production and sales territories. The objective of a cartel to is earn extra profits by colluding.
e.g OPEC

:D:D:D:D