Target produces a good with significant network externalities. The willingness to pay equation is p = 1 – q + 2.5q2 . Show on the graph the firm’s demand curve at each price from 0 < P < 3. What three equilibrium values of q may result if Firm A sets a price of $1.5? Indicate them on your graph. [the quadratic equation helps you solve for one of them.] Are the equilibria you identify stable? Does stability matter to Acme?

Target produces a good with significant network externalities. The willingness to pay equation is p = 1 – q + 2.5q2 . Show on the graph the firm’s demand curve at each price from 0 < P < 3. What three equilibrium values of q may result if Firm A sets a price of $1.5? Indicate them on your graph. [the quadratic equation helps you solve for one of them.] Are the equilibria you identify stable? Does stability matter to Acme?

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter3: Supply And Demand: Theory

Section: Chapter Questions

Problem 8WNG

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