This question refers to the kinked demand curve model of an

Question

This question refers to the "Kinked Demand Curve" model of an oligopoly.

Suppose an oligopolist is currently operating at an equilibrium price and quantity, P* and Q*, respectively. The oligopolist faces two possible demand curves if he changes price, as follows:

Inelastic Demand:       P^I = 10 - 2Q^I

Elastic Demand:         P^E = 8 - Q^E

a. What are the values for P* and Q*?

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