1.12. The industry for small, single-engine airplanes is oligopolistic, and it has achieved tacit collusion. Each firm currently sells 10 airplanes at a price of $200,000 each. Each firm believes that it will sell 1 fewer airplane if it raises the price by $5,000.

And each firm also believes that it can sell 1 more airplane if it lowers the price by $10,000. That is, each firm has a kinked demand curve.

a. How much additional revenue will a firm generate if it produces 1 more (the 11th) airplane?

b. How much revenue will a firm lose if it produces 1 fewer airplane?

c. If the marginal cost of producing an airplane is $120,000, how many airplanes will each firm produce, and at what price?

d. If the marginal cost of producing an airplane is $140,000, how many airplanes will each firm produce, and at what price?