The following graph shows a firm with a kinked demand curve. a. What assumption lies behind the
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a. What assumption lies behind the shape of this demand curve?
b. Identify the firm's profit-maximizing output and price.
c. Use the graph to explain why the firm's price is likely to remain the same, even if marginal costs change.
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Pl MC MR
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a The kinked demand curve assumes that other firms will follow price decreases b...View the full answer
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