8 iMagazine / October, 2014
Profit Maximization
- Profit is maximized when the Marginal Cost of Production is equal to the Marginal Revenue of the product (MC=MR)
- Due to Nonprice competition the final price is higher than in monopolistic competition and much higher than in pure competition
- Companies charge a price that is consistent with the level of sales
Price Fixing
A type of collusion where oligopolists agree to charge the same or similar prices for an object
- Higher prices than those determined by competition
- Might agree to divide the market so each company will sell a certain amount of product