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Question: A firm in an oligopolistic industry has identified two sets of demand curves. If the firm is the only one that changes prices (i.e., other firms do not follow), its demand curve takes the form Q = 82-8P. If, however, it is expected that competit $3.69   Add to cart

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Question: A firm in an oligopolistic industry has identified two sets of demand curves. If the firm is the only one that changes prices (i.e., other firms do not follow), its demand curve takes the form Q = 82-8P. If, however, it is expected that competit

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A firm in an oligopolistic industry has identified two sets of demand curves. If the firm is the only one that changes prices (i.e., other firms do not follow), its demand curve takes the form Q = 82-8P. If, however, it is expected that competitors will follow the price actions of the firm, then th...

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  • August 8, 2020
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Question: A firm in an oligopolistic industry has identified two sets of demand curves. If the firm is

the only one that changes prices (i.e., other firms do not follow), its demand curve takes the form Q =

82-8P. If, however, it is expected that competitors will follow the price actions of the firm, then the

demand curve is of the form Q = 44 -3P.

a) Develop demand schedules for each alternative, and draw them on a graph

b) Calculate marginal revenue curves for each.

c) If the present price and quantity position for the firm is located at the intersection of the two

demand curves, and competitors follow any price decrease but do not follow a price increase,

show the demand curve relevant to the firm.

d) Draw the appropriate marginal revenue curve.

e) Show the range over which a marginal cost curve could rise or fall without affecting the price

the firm charges.



Answer:

a) The demand schedule for each alternative is in the table below

Quantity Price Q1 (Q1 = 82-8P) Q2 (Q2 = 44-3P)
95 1 74 41
90 2 66 38
80 3 58 35
70 4 50 32
60 5 42 29
50 6 34 26
40 7 26 23
30 8 18 20
20 9 10 17
10 10 2 14
5 11 -6 11


The Demand Curve is:

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