Asked by Brian Leones on Jul 03, 2024
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The kinked-demand curve of an oligopolist is based on the assumption that
A) competitors will follow a price cut but ignore a price increase.
B) competitors will match both price cuts and price increases.
C) competitors will ignore a price cut but follow a price increase.
D) there is no product differentiation.
Kinked-demand Curve
A demand curve that has a distinct bend or kink, typically illustrating that a firm in an oligopoly will experience a different elasticity of demand for price increases compared to price decreases.
Price Cut
A reduction in the price of a good or service to attract more customers or boost sales.
Price Increase
A rise in the cost of goods or services, often measured by inflation rates or observed in market prices.
- Acquire knowledge about the kinked-demand curve model and its impact on pricing and output choices.
Verified Answer
Learning Objectives
- Acquire knowledge about the kinked-demand curve model and its impact on pricing and output choices.
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