Suppose the manager is at point B in the Figure below, charging a price of P0. If the manager believes rivals will NOT match price reductions but will match price increases, what does the demand for the firm's product look like?
Homework Answers
ANSWER -
If the rivals will match the increase in the price of the product, that means the demand for the product will lie between point CB due to the increase in price which will lie between CP0 . Hnece due to the price increase the quantity demanded will lie on the left side of Q0
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