Happyland is one of five amusement parks on Sunshine Island. The following graph shows Happyland's kinked demand curve (D₁ - D₂) and the resulting marginal revenue curve (MR₁-MR₂). The graph also shows two possible marginal cost curves (MC₁ and MC₂). PRICE(Dollars per ticket) 60 55 50+ 45 40 35 30 15 10 5 0 + MR. + + 0 1 2 MR, 3 4 5 6 7 8 9 QUANTITY (Millions of tickets per year) 10 MC MC₂ D 4 11 12 Assume Happyland's marginal cost is represented by MC₁. Happyland will set a price of its price, According to the kinked demand curve model, if one firm its price, other firms will not follow suit, but if one firm other firms will do likewise to retain their market share. Therefore, if one of Happyland's competitors increases its price to above the price you just found for Happyland, Happyland will The basic principle behind the kinked demand curve model explains why D₁ portion of t D₂ portion. per ticket. If Happyland's marginal cost decreased from MC₁ to MC₂ on the graph, Happyland would kinked demand curve is relatively elastic than the

Happyland is one of five amusement parks on Sunshine Island. The following graph shows Happyland's kinked demand curve (D₁ - D₂) and the resulting marginal revenue curve (MR₁-MR₂). The graph also shows two possible marginal cost curves (MC₁ and MC₂). PRICE(Dollars per ticket) 60 55 50+ 45 40 35 30 15 10 5 0 + MR. + + 0 1 2 MR, 3 4 5 6 7 8 9 QUANTITY (Millions of tickets per year) 10 MC MC₂ D 4 11 12 Assume Happyland's marginal cost is represented by MC₁. Happyland will set a price of its price, According to the kinked demand curve model, if one firm its price, other firms will not follow suit, but if one firm other firms will do likewise to retain their market share. Therefore, if one of Happyland's competitors increases its price to above the price you just found for Happyland, Happyland will The basic principle behind the kinked demand curve model explains why D₁ portion of t D₂ portion. per ticket. If Happyland's marginal cost decreased from MC₁ to MC₂ on the graph, Happyland would kinked demand curve is relatively elastic than the

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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