21] Which of the following are essential parts of the kinked demand curve model? A. The firm expects its rivals to raise their prices if the firm raises its price. B . The firm expects its rivals to lower their prices if the firm raises its price. C. The firm expect its rivals to raise their prices if the firm lowers its price. D. None of the above [22] You are operating in a market for which you have a kinked demand curve. The kinked demand curve is given by: q = 1200 - 5P for O s q s150, where q is quantity demanded and P is price q = 360 - P for q 2150 If your marginal cost is constant at 100 (i.e., at each quantity marginal cost equals 100), then to maximize profit you should produce a quantity equal to: A 171.43 B. 120 C. 150 D. None of the above [23] Operating as Bertrand competitors in a differentiated product market, firms A and B have total costs equal to zero. Moreover, suppose they face the following price-reaction functions: Firm A: PA = 12 + 1/3PB Firm B: PB = 12 + 1/3PA Accordingly, the Nash equilibrium will have A and B price at (PA and PB, respectively) A 15; 15 B. 18; 18 C. 12; 24 D. None of the above [24] In the cartel model, cheating on the cartel agreement corresponds to producing more than your quota output level. A True B. False [25] Suppose a market consists of 10 firms, with all behaving as Cournot competitors and each having a marginal cost equal to zero. Further, suppose the market demand is given by: Q= 1200 - P, where Q is the market quantity and P is the market price. Focusing on one firm, called it firm 1, if each of the other 9 firms individually chooses to produce a quantity of 100, then in order to maximize its profit firm 1 should produce a quantity equal to: A 50 B. 100 150 200