Marginal Cost & Kinked Demand Curve Question (Check Work)?

Question

Smart Light is one of four firms that sell desk lamps. The graph below shows Smart Light's kinked demand curve (D1D2) and the resulting marginal revenue curve (MR1MR2). The graph also shows two possible marginal cost curves (MC1 and MC2). Assume Smart Light's marginal cost is represented by MC1.

Here’s the Graph: http://courses.aplia.com/problemsetassets/textbooks/arnold_micro_8e/ch22_II/8_static_graph.gif

If Smart Light's marginal cost increased from MC1 to MC2 on the graph:

A. Smart Light will increase its price by $3

B. Smart Light will decrease its price by $3

C. Smart Light will increase its price by $2

D. Smart Light will not change its price

My Answer: D – smart light will not change its price (I’m not sure why though – I need clarification here)

Answer 1

D. Smart Light will not change its price

You are right - demand and thus quantity is not affected, so price will not be changed.