Answered: Figure 1 illustrates the market…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Why is the answer $4 and 4 units?

I am very confused about it. I think "4 units" is demand instead of output when equilibrium is reached. I will appreciated it if you can tell me why. Thank you.

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Figure 1 illustrates the market conditions facing SKF and Timken, initially operating as competitors in
the domestic ball bearing market. Each firm realizes constant long-run costs, MC0-ACo.
Figure 1. International Joint Venture
8
2
O
iMR
MC₂ = AC
MC, AC,
D
8
Quantity of
Ball Bearings
a. With SKF and Timken behaving as competitors, the equilibrium price and output respectively
equal $4 and 4 units

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