Homework Answers
Happyland would set a price of $ 40 per ticket (price corresponding to the quantity where MR = MC1)
Kinked demand curve theory:
If one firm increases its price, other firms will not follow suit, but if one firm decreases its price, other firms will do likewise to retain their market share. Therefore, if Happyland decreases its price below $ 40 per ticket, its competitors will also decrease their prices.
D2 portion of the kinked demand curve is relatively less elastic than the D1 portion.
If Happyland's marginal cost = MC2
It would still charge the same price i.e. $ 40
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Please answer me in detail. Thank you.
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1. The following graph depicts the demand curve,
marginal revenue curve, and marginal cost curve that an oligopolist
faces. The firm is currently charging the cartel price, P*, and
producing the cartel quantity, Q*.
Suppose input prices fall and marginal cost decreases
from MC1 to MC2. Based on this event alone, the firm depicted in
the figure above will
2. Suppose one rental car company raises its prices
and the rival car companies leave their prices unchanged. But when
another...
Box 1 Options: (Price takers)
(Monopolistically Competitive firms) (price makers)
Box 2 Options: (Supply) (Demand) (Average total cost)
Consider Kellogg's production and price choices in the breakfast cereal industry when it is characterized by the price leadership model price makers Therefore, the horizontal Under this theory of oligopoly, all firms other than the dominant firm act as sum of their marginal cost curves is their curve The following graph shows the market demand curve and the horizontal sum of the...
33. Gas’n'Go is one of the 20 gas stations in Lafayette,
California. The following diagram shows the demand curve (D),
marginal revenue curve (MR), marginal cost curve (MC) and average
total cost curve (ATC) for GasN'Go. Assume that the market for
gasoline is a monopolistically competitive market.
Part 1: Label all curves and identify and label the initial price
(P1) and quantity (Q1).
Part 2: Suppose that the price of oil increases, causing Gas'n'Go's
production costs to also increase (oil...
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