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**EOS Bodies / Re: Is video raising cost of bodies? Is it wasted for many shooters?**

« **on:**May 15, 2012, 08:02:59 PM »

Elflord, you're thinking of perfect competition. At worst this is oligopoly. Equilibrium is where Marginal Cost=Marginal revenue: Draw down to the x-axis to get Q,

If you don't believe me, here is a simple analytical example:

Assume supply is flat (just like you said): Cost(Q)=10Q

Assume original linear demand: P=100-Q

New linear demand (after adding video): P=200-Q

Equilibrium price in the first case is 45

Equilibrium price in the second case is 105

That's monopoly, but it will be true in all cases where firms have pricing power(AKA: not perfect competition)

**up**to the**demand curve**to get P.If you don't believe me, here is a simple analytical example:

Assume supply is flat (just like you said): Cost(Q)=10Q

Assume original linear demand: P=100-Q

New linear demand (after adding video): P=200-Q

Equilibrium price in the first case is 45

Equilibrium price in the second case is 105

That's monopoly, but it will be true in all cases where firms have pricing power(AKA: not perfect competition)