Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter9: Market Structure And Long-run Equilibrium
Section: Chapter Questions
Problem 9.4IP
Related questions
Question
![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 $500.00 price to maximize revenue
(see the graph above).
Use the graph pictured to calculate elasticity and total revenue in the elastic,
inelastic, and unit elastic portions of the demand curve at the price and quantity
points specified to explain the theory.
|
Price ($)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F2957e6dc-f791-471e-8faf-303d41a647f1%2F23f03e4c-03e7-4d10-bb36-ac6d3f98fa37%2Flzrtroh_processed.png&w=3840&q=75)
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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