Smart Light is one of four firms that sell desk lamps. The graph below shows Sma

Question

Smart Light is one of four firms that sell desk lamps. The graph below shows Smart Light's kinked demand curve (D1D2) and the resulting marginal revenue curve (MR1MR2). The graph also shows two possible marginal cost curves (MC1 and MC2). Assume Smart Light's marginal cost is represented by MC1. Graph 3.3. Which of the following statements is true?

A. The D1 and D2 portions of the kinked demand curve have about the same elasticity.

B. The D1 portion of the kinked demand curve is relatively less elastic (more inelastic) than the D2 portion.

C. The D1 portion of the kinked demand curve is relatively more elastic than the D2 portion

Explanation / Answer

Ans: C) The D1 portion of the Kinked Demand Curve is relatively more elastic than the the D2 portion.

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