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Question Three Assume that the market demand for aphrodisiac bath oils is P = 300 - 2Q Assume that each firm has a constant marginal
Question Three
Assume that the market demand for aphrodisiac bath oils is P = 300 - 2Q
Assume that each firm has a constant marginal and average total cost of $25: hence MC = 25
- Fill in the table below for each market structure. (You can show working below the table so the answers in the table are clear.)
Collusive monopoly | Cournot Oligopoly | Bertrand Oligopoly | Stackelberg Oligopoly (Firm A is first mover) | |
Firm A's Quantity | ||||
Firm B's Quantity | ||||
Industry Quantity | ||||
Price | ||||
A's Profit | ||||
B's Profit | ||||
Industry Profit |
- Although the Bertrand oligopoly appears to have the best outcome for consumer welfare, in the real-world however, why might the Bertrand oligopoly not necessarily be the best for consumers?
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