The graph below illustrates two demand curves for a firm operating in a differentiated product oligopoly. Initially, the firm charges a price of $60 and produces 10 units of output. One of the demand curves is relevant when rivals match the firm's price changes; the other demand curve is relevant when rivals do not match price changes. Price 110 100- 90 80- 70 60- D₁ 50- 40- 30- 20- D₂ 10- 0 12 15 18 21 24 Quantity (3) For what range in marginal cost will the firm continue to charge a price of $60? +A to $

The graph that accompanies this question illustrates two demand curves for a firm operating in a differentiated-product oligopoly. Initially, the firm charges a price of $60 and produces 10 units of output. One of the demand curves is relevant when rivals match the firm’s price changes; the other demand curve is relevant when rivals do not match price changes. a. Which demand curve is relevant when rivals will match any price change? b. Which demand curve is relevant when rivals will not match any price change? c. Suppose the manager believes that rivals will match price cuts but will not match price increases. (1) What price will the firm be able to charge if it produces 20 units? (2) How many units will the firm sell if it charges a price of $70? (3) For what range in marginal cost will the firm continue to charge a price of $60?

Economics Reference the following information about the market demand function for questions 1 to 15. These questions are on different types of market structures – monopoly, perfect competition, Cournot oligopoly market, and the Stackelberg oligopoly market. The market demand function is given the following equation: P = 2000 – Q where Q is the industry’s output level. Suppose initially this market is served by a single firm. Let the total cost function of this firm be given the function C(Q) = 200Q. The firm’s marginal cost of production (MC) is equal to the firm’s average cost (AC): MC = AC = 200. Now suppose the two firms engage in Stackelberg market competition. Assume firm 1 is the leader (first-mover) and firm 2 is the follower firm (second-mover). Marginal profit function of Stackelberg leader: 900−Q1 QUESTION 14: What will be the market price in this Stackelberg model? Group of answer choices $480 $650 $720 $900 QUESTION 15: Can you calculate the profit earned by the…