Asked by
Katelyn Miley
on Nov 26, 2024Verified
One shortcoming of the kinked demand curve model of oligopoly is that it does not explain
A) why the marginal revenue curve is kinked.
B) how the current price gets determined.
C) what the level of profits is for the firm.
D) why the firm is a least-cost producer.
Kinked Demand Curve Model
An economic model suggesting that price competition among firms may be rigid because a firm raising its price does not lead to competitors following suit, while price decreases are matched. This results in a demand curve with a kink.
Marginal Revenue Curve
A graphical representation that shows the change in total revenue resulting from selling one additional unit of a good or service.
Least-Cost Producer
A producer that can provide goods or services at the lowest possible cost, often due to advantages in technology, processes, or access to resources.
- Elucidate the properties and implications of a kinked demand curve observed in markets characterized by oligopoly.
Verified Answer
AS
Learning Objectives
- Elucidate the properties and implications of a kinked demand curve observed in markets characterized by oligopoly.