Introduction Oligopoly is a market structure in which a few large firms dominate the market. One of the key characteristics of oligopoly is price rigidity — prices tend to remain stable even when costs or demand change. Economist Paul Sweezy attempted to explain this phenomenon using the Kinked Demand Curve Model. This model is based […]
Introduction In the Cournot model of duopoly, two firms compete by choosing quantities simultaneously and independently. Each firm chooses its output assuming the other firm’s output is fixed. The goal is to maximise profit given the market demand and cost conditions. Let’s solve the numerical parts of this problem step by step. Given: Market demand:
Introduction In economics, the concept of returns to scale explains how output changes when all inputs are increased in the same proportion. In the long run, all factors of production are variable. Initially, firms may enjoy increasing returns to scale, but beyond a certain point, they often experience diminishing returns to scale. This means that
Give reasons for diminishing returns to scale accruing to a firm in the long run. Read More »
Introduction Monopoly and Perfect Competition are two extreme forms of market structures in economics. While Perfect Competition represents a market with many sellers and buyers dealing in identical products, Monopoly stands for a market where a single seller dominates with no close substitutes. Understanding the differences between these two market structures helps us understand how
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