Essay
An oligopolist is currently charging a price of $600 and is selling 300 units of output per day. If the firm increases price above $600, then quantity demanded will decline by 3 units for every $1 increase in price. If the firm reduces price below $600, then the quantity demanded will increase by 1.5 units for every $1 decrease in price. If the firm's marginal cost curve is horizontal, within what range could marginal cost vary without giving the firm an incentive to change price or quantity?
Correct Answer:
Verified
Correct Answer:
Verified
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