Figure 9.1 illustrates the market conditions facing SKF and Timken, initially operating as competitors in the domestic ball bearing market. Each firm realizes constant long-run costs, MC₀=AC₀.
Figure 9.1. International Joint Venture

-Consider Figure 9.1.With SKF and Timken behaving as competitors, the equilibrium price and output respectively equal

Question

Figure 9.1 illustrates the market conditions facing SKF and Timken, initially operating as competitors in the domestic ball bearing market. Each firm realizes constant long-run costs, MC₀=AC₀.
Figure 9.1. International Joint Venture

-Consider Figure 9.1.With SKF and Timken behaving as competitors, the equilibrium price and output respectively equal

Quizplus · Accepted Answer

In a competitive market, firms will produce where marginal costs equal marginal revenue. Without the specific details of Figure 9.1, a common outcome in such scenarios is for firms to settle on a price that reflects the combined marginal costs and demand, leading to an equilibrium where both the price and quantity are adjusted to meet at a point where the market demand is satisfied at an efficient price. Given the options, $4 and 4 units suggest a scenario where both firms have adjusted their output to meet at a competitive equilibrium, assuming that the combined output of SKF and Timken meets the market demand at this price point.

Figure 91 Illustrates the Market Conditions Facing SKF and Timken, Initially