calculate the marginal revenue of demand graph, Macroeconomics

Assignment Help:

Gas Guzzler Motors is one of three major auto producers. It is currently producing 6,000 cars a day, and selling them at a price of $10,000 each. Its marketing department tells it that its demand curve depends critically upon whether its competitors match its price changes. If they do not change their prices when GG does, schedule l will apply; if they match GG's price changes, schedule 2 will apply. The schedules are as follows:

                                            Cars           Schedule 1     Schedule 2
                                         (in 000s)      Price per car  Price per car

                                                1                $12,500          $15,000

                                                2                  12,000            14,000

                                                3                  11,500            13,000

                                                4                  11,000            12,000

                                                5                  10,500            11,000

                                                6                  10,000            10,000

                                                7                    9,500              9,000

                                                8                    9,000              8,000

                                                9                    8,500              7,000

                                              10                    8,000              6,000

a) Calculate the marginal revenue (for increments of thousands of cars) associated with each demand schedule.

b) Draw the two demand and MR curves on graph paper.

c) Assume now that, if GG raises its price, its competitors will not raise theirs, but that, if it lowers it price, they will match the price cuts. On the graph paper, show the effective demand curve and marginal revenue curve that face GG.


Related Discussions:- calculate the marginal revenue of demand graph

Estimate demand or supply-equilibrium price, Suppose that the demand curve ...

Suppose that the demand curve for apples is given by Qd = 140 -  5P, where Qd is the number of pounds demanded per year and p is the price per pound. The supply of apples can be de

Marginal approach to profit maximization, The marginal approach to profit m...

The marginal approach to profit maximization means that a firm should produce until a. marginal revenue equals zero b. marginal revenue equals marginal costs c. marginal cost becom

Exante real interest rate, The exante real interest rate is based on _____ ...

The exante real interest rate is based on _____ inflation, while the ex post real interest rate is based on _____ inflation. A) expected; actual B) core; actual C) actual;

About assignment, i have assignment due within less than 24 hours if i sub...

i have assignment due within less than 24 hours if i submit assignment can i get it back before 24 hours?

Demand and supply, The Australian government administers two programs that ...

The Australian government administers two programs that affect the market for cigarettes. First, media campaigns and labelling requirements aimed at making public aware of the dan

Wal-marts supply chain management, Explain the impact of Wal-Mart's supply ...

Explain the impact of Wal-Mart's supply chain management on its total product, marginal product, and average product curves. What has been the effect on its retail prices?

Tariffs and non-tariff barriers, Tariffs and Non-tariff Barriers A sig...

Tariffs and Non-tariff Barriers A significant aspect of the trade reforms of the 1990s was the reduction in the then prevailing very high import duties (over 300 percent in so

Find out fixed cost and average cost, Sara runs a small business assembling...

Sara runs a small business assembling personal computers. This table shows her total cost at different levels of output. Number of computers produced

Public sector, Are there any current subsidy or welfare issues that are bei...

Are there any current subsidy or welfare issues that are being discussed or addressed in parliament or in municipalities

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd