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Suppose than an oligopolist is charging $21 per unit of output and selling 31 units each day. Also suppose that previously it had lowered its price from $21 to $19, rivals matched the price cut, and the firm’s sales increased from 31 to 32 units. It also previously raised its price from $21 to $23, rivals ignored the price hike, and the firm’s daily total revenue came in at $482.
1. What is its daily total revenue?
2. Which of the following is most logical to conclude? The firm’s demand curve is:
A. A curve with a kink in it
B. a linear strait downslope line
C. inelastic over the entire $19 to $23 price range
D. elastic over the $19 to $23 price range
Find the Nash equilibrium of this Bertrand game and find the equilibrium output and profit for each firm.
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