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The demand function for price increases and for price cuts for an oligopolist are, respectively, Q = 210-30P1 or P = 7 - Q/30
The demand function for price increases and for price cuts for an oligopolist are, respectively, Q = 210-30P1 or P = 7 - Q/30 Q2 90-10P2 or P = 9 - Q2/10 The oligopolist's total cost function is: TC = 3.5Q + Q/60 (a) Derive the MR, MR2, and MC functions facing the oligopolist. (b) Determine the price and output at the kink on the demand curve. (c) Determine the upper and lower limits of the MR gap and prove that MC falls in the MR gap. (d) Find the value of the total profits of the oligopolist.
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a To derive the marginal revenue MR we need to take the derivative of the total revenue TR function with respect to quantity Q Since TR P Q we can obt...
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Intermediate Microeconomics
Authors: Hal R. Varian
9th edition
978-0393123975, 393123979, 393123960, 978-0393919677, 393919676, 978-0393123968
