1 Oligopoly Consider a market with price, $P = 16 - Q$. Suppose firms have the cost function, $C(q_i) = q_i^2$. We are going to analyze this market under two market structures: a monopoly and a duopoly.
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The firm's profit-maximizing level of output can be found by setting marginal cost equal to marginal revenue. In this case, the marginal cost is equal to the cost function, C(q) = q. The marginal revenue can be found by taking the derivative of the price function Show more…
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