Oligopoly (Economics) 1) Main assumptions of Oligopoly 2) Price stability in Oligopoly.

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1) Oligopoly is when a particular market is controlled by a small group of firms. For example supermarkets, there are three (there usually exist three companies) companies which dominate the market, Wong and Metro, Santa Isabel and Plaza Vea, and Tottus. The main assumptions that economists make when talking about a situation of Oligopoly are various; three or four large companies dominate the industry, but small companies do exist (smaller companies in the recent example would …

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…will give us the price and the quantity the company should provide. The marginal revenue curve is not continuous, as it has a very big gap in it, this is called the "Region of Indeterminacy", and the MC curve can pass through any part of this region, this gap in the MR curve, allows MC to vary without affecting either final price or quantity. For prices to change, costs would need to rise above MC''.