(solution) Number 5

(solution) Number 5

1. The kinked-demand schedule that an oligopolist believes confronts the firm is given in the table below. Compute the oligopolist s total revenue at each of the nine prices, and enter these figures in the table. Also compute marginal revenue for each unit between the nine prices and enter these figures in the table. From the table, (a) where is the kink in the demand curve? (b) what is the current selling price at that kink and how much output will be demanded? (c) what is the range of marginal cost that will keep the price set at the kink? Price Quantity demanded Total Revenue Marginal Revenue per Unit $5.80 50 $____ 5.60 100 ____ $____ 5.40 150 ____ ____ 5.20 200 ____ ____ 5.00 250 ____ ____ 4.80 264 ____ ____ 4.60 279 ____ ____ 4.40 288 ____ ____ 4.20 300 ____ ____