Question:
![647_Kinked demand curve analysis.jpg](https://secure.tutorsglobe.com/CMSImages/647_Kinked%20demand%20curve%20analysis.jpg)
The above graph depicts a firm that tries to maximize profits or minimize losses. This firm has a Total Cost Equation of 15 + 20Q + .5Q2. Some texts describe the above situation as an oligopoly engaged in cutthroat competition, while others uses the term Sweezy oligopoly to describe this market situation.
Please step me through and explain the following questions
• How much are the firm’s Fixed Costs?
• What is this firm’s profit-maximizing output?
• What price does it charge in order to sell the profit-maximizing output?
The firm has a marginal cost equation that is shown above as MC=$20+$1Q.
If something happens to cause that equation to change to MC=$22+$1Q, how does this change in the firm’s cost structure change its profit-maximizing output and price?
What are the practical implications for the firm’s customers?