Question
Now let's suppose that the oligopolist assumes that its competitors will not match its price increases, but will match its price decreases. On a new
Now let's suppose that the oligopolist assumes that its competitors will not match its price increases, but will match its price decreases. On a new graph, draw the demand and marginal revenue curves. Draw a vertical line at the market price. To the left of the vertical line, show the demand and marginal revenue curves for the firm before the elasticity shifted. To the right, show the demand and marginal revenue curves for the more inelastic assumption. Where does the kink in the demand curve occur? What happens to the marginal revenue curve? (5 points)
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