The kinked-demand curve model helps to explain price rigidity because:

A) there is a gap in the marginal revenue curve within which changes in marginal cost will not affect output or price.
B) demand is inelastic above and elastic below the going price.
C) the model assumes firms are engaging in some form of collusion.
D) the associated marginal revenue curve is perfectly elastic at the going price.

The kinked-demand curve model suggests that there is a gap in the marginal revenue curve at the existing price, meaning that changes in marginal cost will not affect output or price. Firms are reluctant to lower prices because they fear retaliation from competitors, who would also lower their prices, while they are reluctant to raise prices because this would result in a significant loss of market share. Therefore, price rigidity is explained because the model assumes a situation in which firms are engaging in some form of implicit collusion.