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VERTICAL ADDITION: In graphical analysis, the technique of combining two curves by adding the value of the variable on the vertical or Y axis for a given value of the variable on the horizontal or X axis. This is commonly used for deriving the demand curve for a public good from a set of individual demand curves. The demand price that each individual buyer is willing to pay is added for a given quantity to identify the total benefits obtained.
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Lesson 20: Oligopoly | Unit 4: Analysis
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Page: 20 of 24
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In this unit, you should have learned about:- How the kinked-demand curve, derived for an oligopoly operating in an interdependent market, has a more elastic segment for price increases, and a less elastic segment for price decreases.
- The kinked-demand curve analysis, which illustrates how oligopoly prices tend to be relatively rigid because competing firms DON'T match higher prices but DO match lower prices.
- How colluding firms maximizing industry profit by equating industry marginal revenue to industry marginal cost.
- How the output of colluding firm is divided based on the marginal cost of production by each firm.
- Using game theory to illustrate the interdependent decision making among oligopoly firms, such as the decision to advertise.
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LAW OF DIMINISHING MARGINAL RETURNS A principle of short-run production stating that as a firm combines more of a variable input with a fixed input, the marginal product of the variable input eventually declines. This is THE economic principle underlying the analysis of short-run production for a firm. It offers an explanation for the law of supply and the positive slope of the market supply curve.
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BLACK DISMALAPOD
[What's This?]
Today, you are likely to spend a great deal of time visiting every yard sale in a 30-mile radius wanting to buy either a video camera with stop action features or one of those memory foam pillows. Be on the lookout for the happiest person in the room.
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This isn't me! What am I?
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Only 1% of the U.S. population paid income taxes when the income tax was established in 1914.
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"The past is a foreign country; they do things differently there." -- Leslie Poles Hartley, Writer
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CLT
Central Limit Theorem
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