Under the kinked demand model, suppose the firm's demand curve ...

[chandani]

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.

[katieost]

Answer to Question 1

B

Answer to Question 2

B

[chandani]

Excellent

[dantucker]

Gracias!