Scenario $12\mathrm{.}2$:

You are studying a market for which the kinked demand curve model applies. The kinked demand curve is as follows:

$Q=1200-5P$ for $0$lArrQ$<mn\; id="EditorElement\_4503638">1</mn><mn\; id="EditorElement\_4503639">5</mn><mn\; id="EditorElement\_4503640">0</mn>$

$Q=360-P$ for $150$lArrQ

The marginal cost is given as:

$MC=Q$

Refer to Scenario $12\mathrm{.}2.$ What is the profit maximizing level of output?

A$)171\mathrm{.}43$

B$)120$

C$)150$

D$)$ all of the above

E$)$ none of the above

Answer: C

Diff: $3$

Section: $12\mathrm{.}5$

Refer to Scenario $12\mathrm{.}2.$ What is the profit maximizing price?

A$)205\mathrm{.}72$

B$)240$

C$)210$

D$)$ all of the above

E$)$ none of the above

Answer: $C$

Diff: $3$

Section: $12\mathrm{.}5$

Refer to Scenario $12\mathrm{.}2.$ Suppose that the marginal cost increases such that:

$MC=Q+10$

What is the profit maximizing level of output?

A$)171\mathrm{.}43$

B$)120$

C$)150$

D$)$ all of the above

E$)$ none of the above

Answer: C

Diff: $3$

Section: $12\mathrm{.}5$

Refer to Scenario $12\mathrm{.}2.$ Suppose that the marginal cost increases such that:

$MC=Q+10$

What is the profit maximizing price?

A$)205\mathrm{.}72$

B$)240$

C$)210$

D$)$ all of the above

E$)$ none of the above