Diagram 1: [Insert a diagram illustrating a typical short-run profit maximization strategy in an oligopolistic market structure, showing a kinked demand curve, marginal cost curve, and marginal revenue curve.] In the diagram, the kinked demand curve represents the demand faced by an oligopolistic firm. The kink in the demand curve implies that competitors are likely to match any price decrease but not necessarily match any price increase. This creates a situation where the firm's marginal revenue (MR) is discontinuous, resulting in a gap at the kink. The firm maximizes its short-run profits at point A, where marginal cost (MC) equals marginal revenue (MR). The firm sets its price at P1 and produces output Q1, earning a supernormal profit represented by the shaded area. Diagram 2: [Insert a diagram illustrating a typical long-run profit maximization strategy in an oligopolistic market structure, showing a possible outcome of increased competition and reduced profit margins.] In the diagram, the demand curve shifts to the left, indicating increased competition in the area.
Diagram 1: [Insert a diagram illustrating a typical short-run profit maximization strategy in an oligopolistic market structure, showing a kinked demand curve, marginal cost curve, and marginal revenue curve.] In the diagram, the kinked demand curve represents the demand faced by an oligopolistic firm. The kink in the demand curve implies that competitors are likely to match any price decrease but not necessarily match any price increase. This creates a situation where the firm's marginal revenue (MR) is discontinuous, resulting in a gap at the kink. The firm maximizes its short-run profits at point A, where marginal cost (MC) equals marginal revenue (MR). The firm sets its price at P1 and produces output Q1, earning a supernormal profit represented by the shaded area.
Diagram 2: [Insert a diagram illustrating a typical long-run profit maximization strategy in an oligopolistic market structure, showing a possible outcome of increased competition and reduced profit margins.] In the diagram, the demand curve shifts to the left, indicating increased competition in the area.
Please provide the two diagrams and also reference/bibliography
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