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The following graph refers to a situation wherein an oligopolistic firm faces a kinked demand curve. Price ($) $600 $500 $400 $300 $200 $100 0 (5,000, $550) 5,000 (10,000, $500) (11,000, $300) 10,000 Quantity 15,000 20,000 1) In one/two sentences, describe why an oligopolistic firm might face this situation (what is the name of the pricing strategy that leads to this situation?) 2) Compute the elasticities and revenues at all THREE points shown on the graph: (5000, 550), (10000, 500) and (11000,300). Elasticity (5000, $550) = (10000, $500) = (11000, $300) = Revenues (5000, $550) = $2,750,000 (10000, $500) = $5,000,000 (11000, $300) = $3.300.000

The following graph refers to a situation wherein an oligopolistic firm faces a kinked demand curve. Price ($) $600 $500 $400 $300 $200 $100 0 (5,000, $550) 5,000 (10,000, $500) (11,000, $300) 10,000 Quantity 15,000 20,000 1) In one/two sentences, describe why an oligopolistic firm might face this situation (what is the name of the pricing strategy that leads to this situation?) 2) Compute the elasticities and revenues at all THREE points shown on the graph: (5000, 550), (10000, 500) and (11000,300). Elasticity (5000, $550) = (10000, $500) = (11000, $300) = Revenues (5000, $550) = $2,750,000 (10000, $500) = $5,000,000 (11000, $300) = $3.300.000

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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I understand how to compute the revenue but I'm stuck on computing the elasticity. 

The following graph refers to a situation wherein an oligopolistic firm faces a kinked demand curve. Price ($) $600 $500 $400 $300 $200 $100 (5000, $550) = (10000, $500) = (11000, $300) = 0 0 (5,000, $550) 5,000 (10,000, $500) (11,000, $300) 10,000 15,000 20,000 Quantity 1) In one/two sentences, describe why an oligopolistic firm might face this situation (what is the name of the pricing strategy that leads to this situation?) 2) Compute the elasticities and revenues at all THREE points shown on the graph: (5000, 550), (10000, 500) and (11000,300). Elasticity Revenues (5000, $550) = $2,750,000 (10000, $500) = $5,000,000 (11000, $300) = $3,300,000
Transcribed Image Text:The following graph refers to a situation wherein an oligopolistic firm faces a kinked demand curve. Price ($) $600 $500 $400 $300 $200 $100 (5000, $550) = (10000, $500) = (11000, $300) = 0 0 (5,000, $550) 5,000 (10,000, $500) (11,000, $300) 10,000 15,000 20,000 Quantity 1) In one/two sentences, describe why an oligopolistic firm might face this situation (what is the name of the pricing strategy that leads to this situation?) 2) Compute the elasticities and revenues at all THREE points shown on the graph: (5000, 550), (10000, 500) and (11000,300). Elasticity Revenues (5000, $550) = $2,750,000 (10000, $500) = $5,000,000 (11000, $300) = $3,300,000
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