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Because these firms are oligopolies they may collude and engage in profit
maximization like is shown in the graph. Where MC=MR and demand is higher than the point on the ATC curve. But because
there is an incentive for individual firms to cut prices in order to increase their profits collusion is not always effective.
In the long run these firms are breaking even because there ATC curve intercepts
where MR=MC.
When demand is lower than AVC when MC=MR, the firm will shut down. The firm
incurs smaller loses by shutting down instead of producing at ATC.
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