How is total output determined in the dominant firm model?
A)The dominant firm produces the highest level of output given its production function.
B)All firms in the market produce at the level where marginal cost equals marginal revenue.
C)The dominant firm produces at the level where marginal cost equals marginal revenue.
D)The fringe firms produce at the point where marginal revenue equals marginal cost.

Question

Quizplus · Accepted Answer

In the dominant firm model, the dominant firm produces at the level where marginal cost equals marginal revenue, and the fringe firms produce at the level where marginal cost equals market price. As a result, the total output is determined by the dominant firm's level of output, which is determined by its marginal cost and marginal revenue. Therefore, choice C is the best answer.

How Is Total Output Determined in the Dominant Firm Model