1. The following graph shows a firm with a kinked demand curve. a. What assumption lies behind...

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1. The following graph shows a firm with a kinked demand curve.

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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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Economics For Managers

ISBN: 9781292060095

3rd Global Edition

Authors: Paul Farnham

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