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Use the Kinked Demand Curve Model to Explain Why Prices

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Essay

Use the kinked demand curve model to explain why prices in oligopoly industries may remain constant for long periods of time.


Definitions:

Supply Curve

represents the relationship between the price of a good or service and the quantity of that good or service that suppliers are willing to offer for sale, holding all else constant.

Quantity Supplied

The total amount of a good or service that producers are willing and able to sell at a given price in a given time period.

Quantity Demanded

The total amount of a good or service that consumers are willing to purchase at a given price over a specified period.

Equilibrium

A situation where the equilibrium between market demand and supply is reached, leading to stable prices.

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