Assume an oligopolist confronts two possible demand curves for its own output, a

Question

Assume an oligopolist confronts two possible demand curves for its own output, as illustrated below. The first (A) prevails if other oligopolists don't match price changes. The second (B) prevails if rivals do match price changes. Quantity (units per perod) By how much does quantity demanded increase if price is reduced from $11 to 39 and Instructions: Enter your responses rounded to the nearest whole number. Rivals match the price cut? Rivals don't match the price cut? By how much does quantity demanded decrease when price is raised from $11 to $13 and Instructions: Enter your responses rounded to the nearest whole number (do not include negative signs), Rivals match the price hike? (ii) Rivals don't match the price hike?

Explanation / Answer

a)
i) 1 unit
ii)4 units
b)
i)1 unit
ii)4 units

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