in Kinked Demand curve theory" , if a company increases its price, how do its competitors...
in Kinked Demand curve theory" , if a company increases its price, how do its competitors react to it? If a company cut its price, how do its competitors react to it? Can you explain the shape of Kinked Demand curve? Can you describe the shape of MR(marginal Revenue) curve under Kinked Demand curve?
Would be greatly appreciated if it answered in 5sentences
Homework Answers
If a company increase the price of the good then it competitor will not follow him by increasing their price but if the firm in the market decrease the price the other firms will follow him by decreasing their price.
The kinked demand curve is bend at the price point in the market, it is relatively elastic at a higher price and relatively inelastic at the prices below the price.
THe MR curve under the kinked demand curve is discontinous. It breaks at the point where the kinked demand curve is at the equilibrium indicating that the firm can continue to produce at the same price as long as the marginal cost curve passes through the gap in the MR curve.
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in Kinked Demand curve theory" , if a company increases its
price, how do its competitors...
9. Understanding the kinked demand curve theory Aa A Happyland is one of five amusement parks...
9. Understanding the kinked demand curve theory Aa A Happyland is one of five amusement parks on Sunshine Island. The following graph shows Happyland's kinked demand curve (DID2) and the resulting marginal revenue curve (MRIMR2). The graph also shows two possible marginal cost curves (MC1 and MC2) PRICE AND COSTS (Dollars per ticket 48 D1 40 MRT 32 MCI 16 : MC2 MR2 0412 16 20 4 QUANTITY IMittions of tickets per yearl Assume Happyland's marginal cost is represented by...
H) Compare the individual demand curve and marginal revenue curve for company under perfect competition as...
H) Compare the individual demand curve and marginal revenue curve for company under perfect competition as well as monopoly. I would be greatly appreciated if the answer is in 5sentences and by your own thank you.
Contrast and discuss the individual demand curve and marginal revenue curve among perfect competition, monopolistic competition...
Contrast and discuss the individual demand curve and marginal revenue curve among perfect competition, monopolistic competition and Monopoly. Would be greatly appreciated if it answered in 5sentences.
4. A kinked demand curve can explain rigidity of oligopolists' administered price. What does inflexible, administered...
4. A kinked demand curve can explain rigidity of oligopolists' administered price. What does inflexible, administered pricing mean? a. b. Why would an oligopolist have little motivation to change its price frequently? In the diagram below, assume that the equilibrium price is at point G. Is this over costs? Is the oligopolist earning economic profit? Explain C. d. At G there is a kink in the effective demand and marginal revenue curves of the oligopolist. Why? i. If it cuts...
The kinked-demand curve for oligopolists assumes that rivals will
a. The kinked-demand curve for oligopolists assumes that rivals will match price cuts and price increases. match price increases, but ignore price cuts. match price cuts, but ignore price increases. neither match price cuts nor price increases. b. There is a gap in the oligopolist's marginal-revenue curve because price drops abruptly. the cost of production changes abruptly. the slope of the demand curve changes abruptly. price rises abruptly. c. The kinked-demand curve explains price rigidity in oligopoly because firms expect any change in price will lower revenue and profits. firms agree to...
As you describe Paul Sweezy’s Kinked-Demand theory of oligopoly, do the following: Explain why Sweezy’s model...
As you describe Paul Sweezy’s Kinked-Demand theory of oligopoly, do the following: Explain why Sweezy’s model is an illustration of how “strategy and counter-strategy” create interdependence among the large firms who dominate an oligopoly. Using Sweezy’s model, explain the reasons for changes in an oligopolist’s price elasticity of demand as the firm attempts to raise or lower its product price relative to its oligopolist competitors. Why is price competition unsuccessful in this model?
Chapter 14 Vocabulary Name: a. Kinked demand curve b. Cartel c. Price leadership d. Game theory...
Chapter 14 Vocabulary Name: a. Kinked demand curve b. Cartel c. Price leadership d. Game theory e. Collusion f. Strategic behavior g. Homogeneous oligopoly h. Price war i. Differentiated oligopoly j. Oligopoly ( ) Five or fewer firms produce most of the output in an industry, or control a large share of the market. ( ) Many consumer goods, like automobiles and sporting goods, are produced by a few firms. ( ) This is when firm’s break from pricing decision...
Problem 1e. The slope of the demand curve indicates that if the price of Fluff increases...
Problem 1e. The slope
of the demand curve indicates that if the price of Fluff increases
by 20 cents, consumers will buy one less unit. Determine what
happens to profit if price is increased by calculating the new
profit level for Fluff when price is set 20 cents higher than the
profit-maximizing price.
problem 2
Probem 3
Consider the graph, which illustrates the demand for Fluff. Fluff can be produced at a constant marginal and average total cost of $4...
The kinked demand curve explains the observation that in oligopoly markets Multiple Choice Rivals match price...
The kinked demand curve explains the observation that in oligopoly markets Multiple Choice Rivals match price increases. 0 Prices may not change even in the face of cost increases. 0 Practice product differentiation 0 C) Rivals do not match price reductions 0 O Some companies co not play by the rules
Consider the local telephone company, a natural monopoly. The following graph shows the demand curve for...
Consider the local telephone company, a natural monopoly. The following graph shows the demand curve for phone services, the company's marginal revenue curve (labeled MR), its marginal cost curve (labeled MC), and its average total cost curve (labeled ATC). You can hover over the points on the graph to see their exact coordinates. PRICE, COST, MR (Dollars per month) 100 90 80 70 60 Demand 50 40 30 ATC 20 MC 10 MR 54 60 30 36 42 48 0...
9. Understanding the kinked demand curve theory Aa A Happyland is one of five amusement parks on Sunshine Island. The following graph shows Happyland's kinked demand curve (DID2) and the resulting marginal revenue curve (MRIMR2). The graph also shows two possible marginal cost curves (MC1 and MC2) PRICE AND COSTS (Dollars per ticket 48 D1 40 MRT 32 MCI 16 : MC2 MR2 0412 16 20 4 QUANTITY IMittions of tickets per yearl Assume Happyland's marginal cost is represented by...
4. A kinked demand curve can explain rigidity of oligopolists' administered price. What does inflexible, administered pricing mean? a. b. Why would an oligopolist have little motivation to change its price frequently? In the diagram below, assume that the equilibrium price is at point G. Is this over costs? Is the oligopolist earning economic profit? Explain C. d. At G there is a kink in the effective demand and marginal revenue curves of the oligopolist. Why? i. If it cuts...
a. The kinked-demand curve for oligopolists assumes that rivals will match price cuts and price increases. match price increases, but ignore price cuts. match price cuts, but ignore price increases. neither match price cuts nor price increases. b. There is a gap in the oligopolist's marginal-revenue curve because price drops abruptly. the cost of production changes abruptly. the slope of the demand curve changes abruptly. price rises abruptly. c. The kinked-demand curve explains price rigidity in oligopoly because firms expect any change in price will lower revenue and profits. firms agree to...
Problem 1e. The slope
of the demand curve indicates that if the price of Fluff increases
by 20 cents, consumers will buy one less unit. Determine what
happens to profit if price is increased by calculating the new
profit level for Fluff when price is set 20 cents higher than the
profit-maximizing price.
problem 2
Probem 3
Consider the graph, which illustrates the demand for Fluff. Fluff can be produced at a constant marginal and average total cost of $4...
The kinked demand curve explains the observation that in oligopoly markets Multiple Choice Rivals match price increases. 0 Prices may not change even in the face of cost increases. 0 Practice product differentiation 0 C) Rivals do not match price reductions 0 O Some companies co not play by the rules
Consider the local telephone company, a natural monopoly. The following graph shows the demand curve for phone services, the company's marginal revenue curve (labeled MR), its marginal cost curve (labeled MC), and its average total cost curve (labeled ATC). You can hover over the points on the graph to see their exact coordinates. PRICE, COST, MR (Dollars per month) 100 90 80 70 60 Demand 50 40 30 ATC 20 MC 10 MR 54 60 30 36 42 48 0...
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