An Oligopolist That Faces a Kinked Demand Curve Is Charging

question 32

Multiple Choice

An oligopolist that faces a kinked demand curve is charging price P = 6.Demand for an increase in price is Q = 280 - 40P and demand for a decrease in price is Q = 100 - 10P.Over what range of marginal cost would the optimal price remain unchanged?

• A) Between 3 and 5.
• B) Between 2 and 5.
• C) Between 1 and 4.
• D) Between 2 and 4.
• E) Between 3 and 4.

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Definitions:

High Inflation Rates

A situation characterized by a rapid and excessive rise in the general price level of goods and services in an economy over a period of time.

Economy Growth

An increase in the economic output and productivity of a country, often measured by its gross domestic product (GDP) over time.

Investment Bank

A financial institution that assists individuals, corporations, and governments in raising financial capital by underwriting or acting as the client's agent in the issuance of securities.

Federal Budget Deficits

The shortfall that occurs when the U.S. government's expenditures exceed its revenues within a fiscal year.