Assume the manager is located at point B in the diagram above, and he is charging a price of Po. What does the demand for the firm's goods look like if the managemnt anticipates that rivals would not match price reductions but will match price rise instead of price decrease?

Assume the manager is located at point B in the diagram above, and he is charging a price of Po. What does the demand for the firm's goods look like if the managemnt anticipates that rivals would not match price reductions but will match price rise instead of price decrease?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter13: best-practice Tactics: Game Theory

Section: Chapter Questions

Problem 5E

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Question

Assume the manager is located at point B in the diagram above, and he is charging a price of
Po. What does the demand for the firm's goods look like if the managemnt anticipates that
rivals would not match price reductions but will match price rise instead of price decrease?

Price
Demand if rivals
match price changes
A
Demand if rivals
B
do not match
Po
price changes
D2

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