Overview
Economic profit and oligopoly are crucial concepts in understanding market dynamics. Economic profit goes beyond simple profit calculations by including opportunity costs, providing a clearer picture of a firm's financial health. In oligopolistic markets, a few firms hold significant power, influenc...
Key Terms
Example: If a business earns $100,000 but incurs $80,000 in costs, its economic profit is $20,000.
Example: The smartphone market is an oligopoly dominated by companies like Apple and Samsung.
Example: Market structures include perfect competition, monopolistic competition, oligopoly, and monopoly.
Example: In an oligopoly, firms may keep prices stable to avoid price wars.
Example: OPEC is known for colluding to control oil prices.
Example: High startup costs can be a barrier to entry in the airline industry.