Author Question: Under the kinked demand model, suppose the firm's demand curve shifts rightward but the price at ... (Read 78 times)

chandani · **on:** Jul 1, 2018

Under the kinked demand model, suppose the firm's demand curve shifts rightward but the price at which the kink occurs remains the same. In this case, the firm:

A) does not change its output.
B) increases output.
C) decreases output.
D) We do not have enough information to answer this question.

Question 2

Suppose your instructor gave hats with your school's logo to half of your economics classmates. She then asked these students to value the hats, and the average response was 9 per hat.

Under the endowment effect, we should expect that the average value assigned by the economics students who did NOT receive the hats to be: A) higher.
B) lower.
C) the same.
D) We cannot answer this question without knowing more about the risk preferences of the students.