Suppose an oligopoly consists of two firms. firm a lowers price and firm b responds by lowering its price by the same amount. if average costs and industry output remain the same, which of the following will occur?

The profits for firma A and B will decrease.

Step-by-step explanation:

Oligopoly by definition "is a market structure with a small number of firms, none of which can keep the others from having significant influence. The concentration ratio measures the market share of the largest firms".

If the costs remain the same for both companies and both firms decrease the prices then we will have a decrease of profits, we can see this on the figure attached.

We have an equilibrium price (let's assume X) and when we decrease a price and we have the same level of output the area below the curve would be lower and then we will have less profits for both companies.

did you get the answer yet?

step-by-step explanation:

solution:

the given function is ,

      =

the three roots of this quadratic function is , 0 ,8 and 10.all the roots are real and rational.

if a quadratic equation is of the form ,

sum of the roots = a + b +c= 0+8+10=18=  

product of roots taken two at a time = a b + b c+ c a = 0+80+0=80 =  

product of roots = a b c = 0=  

there are 11 doors in a hall starting from 0 to 11.the entry in the hall is permitted through gate number 0 and exit is allowed through only gate number 8 and 10.so, three roots(0,8,10) of quadratic function is given by entry and exit route of this hall.