Explore BrainMass

marginal cost

In exhibit six what is the highest dollar amount to which marginal cost can rise without changing price? Files attached.


Solution Preview

In exhibit six the highest dollar amount the marginal costs can reach without affecting price is $18. This is because you are dealing with a kinked D curve, and the MC can fluctuate between the area where the marginal revenues slope changes, without affecting price or quantity. Point B represents the highest value in this area: the $18 price level.

In the ...

Solution Summary

Examples of cartels which have suffered a lot of undercutting due to economic incentives are embedded.