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An oligopolist faces a kinked demand curve. In your own words, describe why firms face this situation.

An oligopolist faces a kinked demand curve. In your own words, describe why firms face this situation.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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An oligopolist faces a kinked demand curve. In your own words, describe why firms face this situation. $600 (5,000, $550) (10,000, $500) $500 $400 (11,000, $300) $300 $200 $100 5,000 10,000 15,000 20,000 Quantity Theory says that oligopolies should stick to the $500.00 price to maximize revenue (see the graph above). Use the graph pictured to calculate elasticity and total revenue in the elastic, inelastic, and unit elastic portions of the demand curve at the price and quantity points specified to explain the theory. | Price ($)
Transcribed Image Text:An oligopolist faces a kinked demand curve. In your own words, describe why firms face this situation. $600 (5,000, $550) (10,000, $500) $500 $400 (11,000, $300) $300 $200 $100 5,000 10,000 15,000 20,000 Quantity Theory says that oligopolies should stick to the $500.00 price to maximize revenue (see the graph above). Use the graph pictured to calculate elasticity and total revenue in the elastic, inelastic, and unit elastic portions of the demand curve at the price and quantity points specified to explain the theory. | Price ($)
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