The Kinked Demand Curve Model Is Based on the Assumption

question 106

Multiple Choice

The kinked demand curve model is based on the assumption that each firm:

• A) considers its rival's output to be fixed.
• B) considers its rival's price to be fixed.
• C) believes rivals will match all price changes.
• D) believes rivals will never match price changes.
• E) none of the above

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Definitions:

New Equity Sales

The process of offering new shares of stock to the public or existing shareholders to raise capital.

Dividends Paid

The total amount of money distributed by a company to its shareholders out of its profits or reserves, usually on a regular basis.

CCA Rate

The annual depreciation rate used for tax purposes to write off the cost of capital assets over time in Canada.

UCC

Uniform Commercial Code, a comprehensive set of laws governing all commercial transactions in the United States.