Asked by
Amanda Parrish
on Dec 19, 2024Verified
The kinked-demand model of oligopoly assumes that
A) rivals will ignore price increases but will match price cuts.
B) rivals will ignore price cuts but will match price increases.
C) the oligopolistic firms are colluding.
D) a firm faces a more elastic demand curve if it cuts its price, and less elastic if it raises its price.
Kinked-demand Model
A model used to explain price stability in oligopolistic markets, suggesting that firms may not change their pricing in response to small changes in costs or demand due to a perceived kink in the demand curve.
Price Increases
A rise in the cost of goods and services over a period of time, often measured as a percentage.
Price Cuts
Reductions in the selling price of goods or services, often used as a strategy to increase demand or compete more effectively in the market.
- Understand the intricacies of the kinked-demand curve model and its consequences on pricing and output determinations.
Verified Answer
BG
Learning Objectives
- Understand the intricacies of the kinked-demand curve model and its consequences on pricing and output determinations.