This problem examines the behavior of marginal revenue in the kinked demand model and requires completion of
Question:
a. What is Q ≤ Qb? Provide an equation for MR in this instance and graph this on the graph begun in Problem 12d.
b. What is MR for Q ≥ Qh? Provide an equation for MR in this instance and graph this on the graph begun in Problem 12d.
c. What happens if marginal cost is $3? How much should firm A produce?
d. What if marginal cost increased to $4 or decreased to $2? Explain why this happens.
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Step by Step Answer:
a MR has the same intercept and twice the slope as inverse demand so MRQ 8 2Q for Q 2 b MRQ 10 4Q fo...View the full answer
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Related Book For 
Managerial Economics
ISBN: 978-0133020267
7th edition
Authors: Paul Keat, Philip K Young, Steve Erfle
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