Explore BrainMass

marginal cost

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

© BrainMass Inc. brainmass.com August 19, 2018, 12:58 pm ad1c9bdddf


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.