Use the following to answer questions 15 through 16: 15. Refer to the graph abov

Question

Use the following to answer questions 15 through 16:

    15.   Refer to the graph above that shows an oligopolist facing a kinked demand curve. The firm will not lower price when marginal costs fluctuate between which two points?

            A) a and b.    B) b and c.    C) c and d.    D) a and d.

    16.   The oligopolist shown in the graph above currently charges a price P1. It believes that rival firms will:

            A) gain market share if it lowers its price.       C)   not raise price if it raises price.

            B)   lose market share if it lowers price.           D)   not lower price if it lowers price.

Explanation / Answer

B)

b and c

C)   

not raise price if it raises price

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