Asked by Denise Rodriguez on May 28, 2024
Verified
(Figure: Monopoly Profits in Duopoly) Use Figure: Monopoly Profits in Duopoly.Suppose there are two firms in this industry.Each firm faces an identical demand curve,D1, and the market demand curve is D2.The figure illustrates how firms can reap monopoly profits,even in an industry with:
A) free entry and exit.
B) two firms.
C) monopolistic competition.
D) a four-firm concentration ratio of 50.
Duopoly
A market structure dominated by two companies, resulting in limited competition.
Demand Curve
A chart depicting how the price of an item correlates with the amount of that item consumers are ready and capable of buying at different price levels.
- Describe how perfectly competitive market outcomes differ from those in oligopolistic markets with collusion.
Verified Answer
MA
Mohanad AbdulkareemMay 30, 2024
Final Answer :
B
Explanation :
The scenario describes a duopoly, which means there are two firms in the industry. This is directly stated in the question, indicating that even with two firms, monopoly profits can be achieved, which aligns with choice B.
Learning Objectives
- Describe how perfectly competitive market outcomes differ from those in oligopolistic markets with collusion.
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