Quantity of an outcome produced under oligopoly market.

Question

if two firms (firm A and firm B) are competing selling T-shirts, both at $12 per shirt, both have a quantity of 50 and both can produce a t-shirt at a cost of $2 per shirt both marginal and average. If both companies are competing directly against each other in prices, what will the new marginal price of company B will be? and what will be their profits? Also, how do you solve the equilibrium price in oligopolies?

Answer 1

Question

Chapter 17.1, Problem 1QQ

To determine

Quantity of an outcome produced under oligopoly market.

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if two firms (firm A and firm B) are competing selling T-shirts, both at $12 per shirt, both have a quantity of 50 and both can produce a t-shirt at a cost of $2 per shirt both marginal and average. If both companies are competing directly against each other in prices, what will the new marginal price of company B will be? and what will be their profits? Also, how do you solve the equilibrium price in oligopolies?

If the members of an oligopoly could agree on a total quantity to produce, what quantity would they choose? If the oligopolists do not act together but instead make production decisions individually, do they produce a total quantity more or less than in your answer to the previous question? Why?

What are some of the barriers to entry that can keep the number of sellers small in an Oligopoly? Explain what these barriers to entry can mean for the long run profits in oligopoly. Give a few examples of businesses that you think are oligopolists and what the barriers to entry are in those markets.