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Compute the marginal revenue and price

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A company in an oligopolistic industry has identified two sets of demand curves. If the company is the only one that changes prices (that is, other companies don't follow its lead), its demand curve is Q = 82 - 8P.  If, however, it is expected that competitors will follow the price actions of the company, then the demand curve will be Q = 44 - 3P.

1. Prepare a demand schedule for both demand curves and prepare them on an Excel graph.

2. Calculate the marginal revenue for each.

3. If the present price and quantity is located at the intersection of the two demand curves, and competitors follow price decreases but not price increases, show in the graph the relevant demand curve to the company.

4. Prepare and graph the appropriate marginal revenue curves for both demand curves on the Excel diagram.Show on the graph the range over which a marginal cost curve could rise or fall without affecting the price the firm charges.

Reference no: EM1312891

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