Two firms, A and B, produce identical product (crude oil, for Instance) have the same cost curves shown on the left figure below. Their production levels are able to meet the demand curve of the whole market shown on the right figum below. The lowest point of ATC curve can be achieved with a quantity of 5 units (a unit can be 1 million tons, for instance), and the corresponding ATC = 20 units. The demand curve of the market has a slope of -3.5, so the prices 27 and 34 when the quantities are 8 and 6, respectively. %3D

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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Two firms, A and B, produce identical product (crude oil, for Instance) have the same cost curves shown on the left
figure below. Their production levels are able to meet the demand curve of the whole market shown on the right figure
below. The lowest point of ATC curve can be achieved with a quantity of 5 units (a unit can be 1 million tons, for
instance), and the corresponding ATC = 20 units. The demand curve of the market has a slope of -3.5, so the prices are
27 and 34 when the quantities are 8 and 6, respectively.
MC
АТС
Demand
Curve
34
34
30
27
27
20
Q
3 5
6 8
10
This is a market structure called [a] (fill in the blank with one of the terms: monopoly, monopolistic competition, legal
duopoly, natural duopoly).
20
Transcribed Image Text:Two firms, A and B, produce identical product (crude oil, for Instance) have the same cost curves shown on the left figure below. Their production levels are able to meet the demand curve of the whole market shown on the right figure below. The lowest point of ATC curve can be achieved with a quantity of 5 units (a unit can be 1 million tons, for instance), and the corresponding ATC = 20 units. The demand curve of the market has a slope of -3.5, so the prices are 27 and 34 when the quantities are 8 and 6, respectively. MC АТС Demand Curve 34 34 30 27 27 20 Q 3 5 6 8 10 This is a market structure called [a] (fill in the blank with one of the terms: monopoly, monopolistic competition, legal duopoly, natural duopoly). 20
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