Page 24 - FINAL CFA I SLIDES JUNE 2019 DAY 5
P. 24
Session Unit 4:
15. The Firm & Market Structures
LOS 15.b: Explain relationships between price, marginal revenue, marginal cost, economic profit, and the
elasticity of demand under each market structure,
LOS 15.d: Describe and determine the optimal price and output for firms under each market structure.
LOS 15.e: Explain factors affecting long-run equilibrium under each market structure.
Cournot duopoly model, p.31/32/33 –Self interest rules and bad for all!!
Collude to charge high price
R50/R100/R150/R200!
Collusion prospects? P. 34!
• Few firms.
• Similar products (less differentiated).
• Similar cost structures
• Purchases are relatively small and frequent.
• Retaliation by other firms for cheating is more certain and more severe.
• There is less actual or potential competition from firms outside the cartel.
