Suppose Grady, Grace, and George own the 3 wrecker services in the small town of Collisionville. Each currently charges $350 for a standard towing job within town. Competition is heating up and each wants to grow their market share. Use this information to answer the following: What does the Law of Demand say that Grace can do to grow her market share? Suppose that the Kinked Demand Curve Theory describes this market well. How would considering this theory impact Grace’s decision on part 1?

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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Suppose Grady, Grace, and George own the 3 wrecker services in the small town of Collisionville. Each currently charges $350 for a standard towing job within town. Competition is heating up and each wants to grow their market share. Use this information to answer the following:

  1. What does the Law of Demand say that Grace can do to grow her market share?
  2. Suppose that the Kinked Demand Curve Theory describes this market well. How would considering this theory impact Grace’s decision on part 1?
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  1. Suppose instead that George decides to lower his price first. If Grace is the market leader (or price leader), how might she choose to respond? Why?
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