Suppose a firm faced a kinked demand curve that is described by this table. Answer the questions
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Suppose a firm faced a kinked demand curve that is described by this table. Answer the questions below.
a. Where is the “kink” in this demand curve? What are other firms doing above the kink? Below it?
b. If this firm has a constant MC = AC of $3, what output and price will it choose?
c. How far can its MC go before it raises its price?
d. How much can its MC fall before it lowers its price?
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Quantity 1 Price $20 2 19 3 18 4 17 5 16 6 15 7 12 8 9 9 6 10 3
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a Between 6 and 7 Q Above 15 only this firm is ...View the full answer
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