According to the Kinked Demand Curve Theory of Sticky Prices

question 89

Multiple Choice

According to the kinked demand curve theory of sticky prices, in an oligopolistic market:

• A) a price decrease by one firm will not be followed by the other firms.
• B) a price increase by one firm will be followed by the other firms.
• C) the kinked demand curve is inelastic in the upper portion and elastic in the lower portion of the curve.
• D) the kinked demand curve is elastic in the upper portion and inelastic in the lower portion of the curve.

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Definitions:

Performance Obligation

A duty or task that a company must execute to transfer goods or services to a customer under the terms of a contract.

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board.

Accrual

The accounting principle of recording revenues and expenses when they are incurred, regardless of when cash transactions occur.

Contra Asset

A balance sheet account used to reduce the value of related asset accounts to report their net value; examples include accumulated depreciation or allowance for doubtful accounts.