In the Kinked-Demand Model of Oligopoly, If One Firm Increases

question 144

Multiple Choice

In the kinked-demand model of oligopoly, if one firm increases its price, the most likely reaction of the other firms will be to

• A)decrease their prices.
• B)increase their prices.
• C)not change their prices.
• D)reduce their quantity.

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Definitions:

Weighted Average

A calculation that takes into account the varying weights of items in a dataset, often used in accounting to compute inventory values.

Common Shares

Equity investments representing ownership in a corporation, granting holders voting rights and a share in the company's profitability.

Earnings Per Share

A financial ratio that indicates the portion of a company's profit allocated to each outstanding share of common stock.

Growth Stocks

Shares in companies that are expected to grow at an above-average rate compared to other companies in the market.