If an Oligopolist's Demand Curve Has a "Kink" in It

question 56

Multiple Choice

If an oligopolist's demand curve has a "kink" in it, then over some interval,

• A)the oligopolist's marginal cost curve will have a break in it.
• B)the oligopolist need not fear entry into the industry by new firms.
• C)the oligopolist's competitors will not react to its price changes, either up or down.
• D)changes in marginal cost will not cause a change in the profit-maximizing price.

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Definitions:

Asset Revaluation

The upward or downward adjustment of the book value of an asset to properly reflect its current market value.

Profits

The financial gain obtained when revenues generated from business activities exceed the expenses and costs associated with those activities.

Investor

An individual or entity that commits capital with the expectation of receiving financial returns, often through the purchase of stocks, bonds, or other investment vehicles.

Deferred Tax Liability

A tax obligation that a company owes but has not yet paid, arising from temporary differences between accounting and tax treatments of income and expenses.