Happyland is one of five amusement parks on Sunshine Island. The following graph shows Happyland's kinked demand curve (D₁ - D₂) and the resulting marginal revenue curve (MR₁-MR₂). The graph also shows two possible marginal cost curves (MC₁ and MC₂). PRICE(Dollars per ticket) 60 55 50+ 45 40 35 30 15 10 5 0 + MR. + + 0 1 2 MR, 3 4 5 6 7 8 9 QUANTITY (Millions of tickets per year) 10 MC MC₂ D 4 11 12 Assume Happyland's marginal cost is represented by MC₁. Happyland will set a price of its price, According to the kinked demand curve model, if one firm its price, other firms will not follow suit, but if one firm other firms will do likewise to retain their market share. Therefore, if one of Happyland's competitors increases its price to above the price you just found for Happyland, Happyland will The basic principle behind the kinked demand curve model explains why D₁ portion of t D₂ portion. per ticket. If Happyland's marginal cost decreased from MC₁ to MC₂ on the graph, Happyland would kinked demand curve is relatively elastic than the
Happyland is one of five amusement parks on Sunshine Island. The following graph shows Happyland's kinked demand curve (D₁ - D₂) and the resulting marginal revenue curve (MR₁-MR₂). The graph also shows two possible marginal cost curves (MC₁ and MC₂). PRICE(Dollars per ticket) 60 55 50+ 45 40 35 30 15 10 5 0 + MR. + + 0 1 2 MR, 3 4 5 6 7 8 9 QUANTITY (Millions of tickets per year) 10 MC MC₂ D 4 11 12 Assume Happyland's marginal cost is represented by MC₁. Happyland will set a price of its price, According to the kinked demand curve model, if one firm its price, other firms will not follow suit, but if one firm other firms will do likewise to retain their market share. Therefore, if one of Happyland's competitors increases its price to above the price you just found for Happyland, Happyland will The basic principle behind the kinked demand curve model explains why D₁ portion of t D₂ portion. per ticket. If Happyland's marginal cost decreased from MC₁ to MC₂ on the graph, Happyland would kinked demand curve is relatively elastic than the
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter14: Monopoly
Section: Chapter Questions
Problem 6PA
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