In Table1 below, an oligopolistic firm faces two demand schedules. The current price is given as...

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In Table1 below, an oligopolistic firm faces two demand schedules. The current price is given as $185.Study the table and answer the following questions:(i) What would the demand curve be under the kinked demand curve hypothesis? Explain.(ii) Plot the marginal revenue curve corresponding to the kinked demand curve and explain.(iii) Given that Marginal Cost is $150 at every level of output, copy the table and calculate Marginal Revenue. Determine the profit- maximizing level of output and plot it on the graph.Table-1  	 		 			Competitors quantity demands 			Price 			Competitors follow: quantity demands 			Total RevenueColumn1x2 			Marginal Revenue(MR) 			Marginal Cost(MC) 		 	 
	
Document Preview: In Table1 below, an oligopolistic firm faces two demand schedules. The current price is given as $185. Study the table and answer the following questions: (i) What would the demand curve be under the kinked demand curve hypothesis? Explain.  (ii) Plot the marginal revenue curve corresponding to the kinked demand curve and explain. (iii) Given that Marginal Cost is $150 at every level of output, copy the table and calculate Marginal Revenue. Determine the profit- maximizing level of output and plot it on the graph. Table-1Competitors quantity demands Price Competitors follow: quantity demandsTotal RevenueColumn1x2Marginal Revenue(MR)Marginal Cost(MC)20200354000150301954058501504019045760015050185509250150601805510800150701756012250150

Robert · Accepted Answer

In Table1 below, an oligopolistic firm faces two demand schedules. The current price is 
given as $185.  
Study the table and answer the following questions:  
(i) What would the demand curve be under the kinked demand curve hypothesis? 
Explain.   
 
 
 
 
The kinked demand curve model hypothesis is  that a business might face 
a dual demand curve for its product based on the likely reactions of other 
firms to a change in its price or another variable 
The firm Current Price is $185 which is same as its competitors 
 If a business raises price and others leave their prices constant, then  
expect quite a large substitution effect making demand relatively price 
elastic. The business would then lose market share and expect to see a 
fall in its total revenue.

In Table1 below, an oligopolistic firm faces two demand schedules. The current price is given as $185. Study the table and answer the following questions: (i) What would the demand curve be under the...

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