The Frisco Firm is operating the intersection of the following two demand functi

Question

The Frisco Firm is operating the intersection of the following two demand functions: Q1=16,000-8P1 Q2=10,000-3P2

1) Calculate the current price and quantitiy
20 One of the demand functions is the one that exists if everyone follows what the Frisco Firm does with its price and the other demand functio is the one that exists if no one follows what the Frisco does with respect to its price. Which is which and why?
2) Assume Fisco Firm Lowers its prive by $10 and that everyone follows the price change, By how much will revenue increase/decrease? If Frisco Firm lowers its price and no one follows, how much will it's revenue increase/decease?
3) Now assume the Frisco Firm raises its price by $10 and everyone follows the price rise. By how much will revenue increase/decease? If Frisco Firm raises its price by $10 and no one follows, by how much will its reveune increase/decrease?

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Explanation / Answer

1) Q1 = Q2 = Q ;

and P1 = P2 = P ;

Q1=16,000-8P1 ; Q2=10,000-3P2 ;

16000 - 8P = 10000 - 3P ;

6000 = 5 P ;

P = $1200

Q = 6400 ;

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