Which of the Following Is Cited as a Problem with the Kinked

question 66

Multiple Choice

Which of the following is cited as a problem with the kinked demand curve model?

• A)It assumes that firms do not attempt to maximize profits.
• B)It assumes that firms determine the profit-maximizing level of output by equating marginal cost and average variable cost.
• C)It does not explain how the equilibrium market price is determined.
• D)It does not explain the price stickiness that is routinely observed in oligopolistic markets.

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Definitions:

Input

Resources or factors used in the production process to generate output, such as labor, capital, and materials.

Marginal Product

Marginal product refers to the additional output that is generated by employing one more unit of a particular input, holding the quantities of other inputs constant.

Fertilizer

Materials, either natural or synthetic, applied to soils or directly to plants, to supply nutrients essential for growth.

Bushels

A unit of volume that is used primarily in the United States for quantifying the volume of agricultural commodities like grains.