Oligopoly Flashcards
1
Q
What is the nature of an oligopoly?
A
- Few sellers
- Homogeneous or differentiated
- Market is restricted
- Actions affect other sellers
2
Q
What is unique about the demand curve?
A
It has a kink at the market market price. At the market price, it is more elastic. Below the kink it is less elastic.
3
Q
How does a kink affect MR?
A
it causes it to go horizontal
4
Q
Where is price set?
A
MR = CR extend the link to the demand curve, that equals the price.
5
Q
In an oligopoly, price > MC which results in????
A
A misallocation of resources (excess profits)
