Use the following to answer questions below :
-Refer to the kinked demand graph. If an oligopolistic firm with constant unit cost equal to $40 faces this demand curve, then the firm will
A) produce 2 units of output.
B) produce 4 units of output.
C) produce 6 units of output.
D) None of the above is correct.

Question

Use the following to answer questions below : 
-Refer to the kinked demand graph. If an oligopolistic firm with constant unit cost equal to $40 faces this demand curve, then the firm will
A) produce 2 units of output. 
B) produce 4 units of output. 
C) produce 6 units of output. 
D) None of the above is correct.

Quizplus · Accepted Answer

The firm will produce 4 units of output because at that quantity, marginal cost equals marginal revenue.

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