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.

---

Definitions:

Required Return

The minimum expected return an investor demands for an investment, reflecting its risk level.

Investment Centers

Business units or departments that are directly responsible for generating returns on assets allocated to them.

Controllable Margin

The portion of profit or margin that can be directly influenced by managing costs or expenses within a department or area.

Average Operating Assets

The average value of the assets used in the operation of a business, taken over a specific period, which may be used to evaluate the effectiveness of asset use in generating revenue.