ECON 625 Problem Set 5 Printable(1).docx - ECON 625...

This preview shows page 1 - 2 out of 5 pages.

The preview shows page 1 - 2 out of 5 pages.
ECON 625 Managerial EconomicsProblem Set 51)Questions 1 through 5 refer to the following scenario. Suppose three firms facethe same total market demand for their product. This demand is:Price (P)Quantity (Q)$8020,0007025,0006030,0005035,000Suppose further that all three firms are selling their product for $60 and each hasabout one-third of the total market.What is the amount of total revenue each firm receives, in dollars?
2)Now assume that one of the firms, in an attempt to gain market share at theexpense of the others, drops its price to $50. The other two quickly follow suit.What is the amount of total revenue each firm now receives, in dollars, roundedto the nearest dollar?
3)What impact has the price drop had on the revenue of each firm?
4)If the firms had all raised their prices to $70 instead of lowering price, what wouldbe the amount of total revenue each firm would have received, in dollars,rounded to the nearest dollar?
5)Would the firms have been better off raising the price to $70, lowering to $50, ormaking no change?

Upload your study docs or become a

Course Hero member to access this document

Upload your study docs or become a

Course Hero member to access this document

End of preview. Want to read all 5 pages?

Upload your study docs or become a

Course Hero member to access this document

Term
Fall
Professor
N/A

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture