Asked by Avery Harris on May 09, 2024
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Suppose an oligopolistic producer assumes its rivals will ignore a price increase but match a price cut.In this case the firm perceives its:
A) demand curve as being of unit elasticity throughout.
B) supply curve as kinked,being steeper below the going price than above.
C) demand curve as kinked,being steeper below the going price than above.
D) demand curve as kinked,being steeper above the going price than below.
Kinked Demand Curve
A demand curve in oligopolistic market structures characterized by a distinct bend or kink at the current price; it reflects that price increases by one firm will not be followed by others, while price decreases will be.
Price Cut
A reduction in the selling price of products or services, often used as a strategy to increase consumer demand or compete more effectively.
Elasticity
A measure used in economics to show how much the quantity demanded of a good responds to a change in the price of that good, expressed as a percentage.
- Learn about the kinked-demand curve concept and its application in analyzing how prices are determined and maintained in oligopolistic environments.
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Learning Objectives
- Learn about the kinked-demand curve concept and its application in analyzing how prices are determined and maintained in oligopolistic environments.
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