Answered: Figure 1 illustrates the market…

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter11: Price And Output Determination: Monopoly And Dominant Firms

Section: Chapter Questions

Problem 2E: Ajax Cleaning Products is a medium-sized firm operating in an industry dominated by one large...

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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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