Say that two firms who together produce all the output in a given market face a

Question

Say that two firms who together produce all the output in a given market face a kinked demand curve as shown in the graph http:/idrive google.com/tle/d/oB nFcDTTSUNJUOOtZWJSOFd4azgview?usp-sharing 3.3. Select the best explanation for why the demand curve is kinked. 0 O O A. The demand curve is kinked because one nm has increasing returns to scale and the other firm has constant returns to scale. B. It one irm raises the price, the other firm keeps its price the same, but if one firm lowers the price, the other firm also lowers its price C. The demand curve is kinked because of price discrimination. O D. All firms in this market are price takers. Continue without saving

Explanation / Answer

Answer is option c, because under price dicrimination th producer charge the group of individuals differntly which are segregated on the the basis of different elasticity of demand.

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