The figure above shows the market for airplanes.
-Suppose the airplane market is an oligopoly.According to the figure above,the quantity produced can range as high as ________ planes per week and as low as ________ planes per week.

Question

Quizplus · Accepted Answer

In an oligopoly, a few firms dominate the market and they have the ability to affect the market price. The quantity produced in an oligopoly is generally less than what would occur in a perfectly competitive market. Looking at the figure, we see that at a price of $15, the quantity produced is around 6 planes per week. This is due to the fact that the firms in the oligopoly have an incentive to limit production in order to keep the price high. However, if a firm decides to increase production, it can gain a larger market share and potentially increase profits. If one firm increases production, the other firms may follow suit, leading to a higher quantity produced. Based on this, the quantity produced can range as high as 12 planes per week (if all firms decide to increase production) and as low as 6 planes per week (if all firms decide to stick with their current production levels). Therefore, the best choice is B.

The Figure Above Shows the Market for Airplanes