What would be the profit situation in an oligopoly market if the average cost is greater than the average revenue? Explain in one sentence.
5 answers
In an oligopoly market where the average cost is greater than the average revenue, firms would likely be experiencing losses as they are unable to cover their production costs with the revenue generated from their sales.
Why are they unable to cover their production costs with the revenue generated from their sales? Explain in one sentence.
They are unable to cover their production costs with the revenue generated from their sales because in an oligopoly market, there are only a few large firms who have significant market power and can influence prices, leading to lower revenue compared to costs.
Can you combine both answers in one sentence.
In an oligopoly market where the average cost exceeds average revenue, firms are likely experiencing losses as they are unable to cover production costs with revenue due to the market power of only a few large firms influencing prices.
1 answer