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 (MC, and MC₂). PRICE (Dollars per ticket) 24 22 20 18 16 14 12 10 4 2 0 0 MR₁ D₁ MR₂ 4 5 6 7 8 9 QUANTITY (Millions of tickets per year) 1 2 3 10 MC, MC, D. 11 4 12 (?) Assume Happyland's marginal cost is represented by MC2. Happyland will set a price of per ticket. its price, other firms will not follow suit, but if one firm its price, According to the kinked demand curve model, if one firm other firms will do likewise to retain their market share. Therefore, if one of Happyland's competitors decreases its price to below the price you just found for Happyland, Happyland will The basic principle behind the kinked demand curve model explains why the D₁ portion of the kinked demand curve is relatively elastic than the D₂ portion. If Hannyland's marginal cost increased from MCs to MC on the graph. Hannyland would

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 (MC, and MC₂). PRICE (Dollars per ticket) 24 22 20 18 16 14 12 10 4 2 0 0 MR₁ D₁ MR₂ 4 5 6 7 8 9 QUANTITY (Millions of tickets per year) 1 2 3 10 MC, MC, D. 11 4 12 (?) Assume Happyland's marginal cost is represented by MC2. Happyland will set a price of per ticket. its price, other firms will not follow suit, but if one firm its price, According to the kinked demand curve model, if one firm other firms will do likewise to retain their market share. Therefore, if one of Happyland's competitors decreases its price to below the price you just found for Happyland, Happyland will The basic principle behind the kinked demand curve model explains why the D₁ portion of the kinked demand curve is relatively elastic than the D₂ portion. If Hannyland's marginal cost increased from MCs to MC on the graph. Hannyland would

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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