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Important terms in studying OligopolyEdit

Profit maximization conditions: An oligopoly maximizes profits by producing where marginal revenue equals marginal costs.

Number of firms: "Few" – a "handful" of sellers. There are so few firms that the actions of one firm can influence the actions of the other firms.

Long run profits: Oligopolies can retain long run abnormal profits. High barriers of entry prevent sideline firms from entering market to capture excess profits.

Product differentiation: Product may be homogeneous (steel) or differentiated (automobiles).Important Terms Profit maximization conditions: An oligopoly maximizes profits by producing where marginal revenue equals marginal costs.

Ability to set price: Oligopolies are price setters rather than price takers.

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