Author Question: Refer to Figure 12-5. What is the amount of the firm's fixed cost of production? A) 5,400 B) ... (Read 134 times)

jrubin

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Refer to Figure 12-5. What is the amount of the firm's fixed cost of production?
 
  A) 5,400 B) 6,750
  C) 8,100 D) It cannot be determined.

Question 2

How does the demand curve for an oligopoly firm differ from the demand curves for firms in competitive market structures?
 
  What will be an ideal response?


popopong

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Answer to Question 1

A

Answer to Question 2

The demand curve facing a perfectly competitive firm is horizontal at the prevailing market price. In other words, the perfect competitor does not influence market price; rather it takes the price as given. A firm in an oligopolistic industry can influence market price and therefore faces a downward-sloping demand curve. But not much else can be said about its demand curve because firms in oligopolistic industries are interdependent, that is, each firm reacts to its rivals' behaviors, or at least, to what it thinks its rivals will do. Consequently, it is difficult to determine an individual oligopolist's demand curve.



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