One Shortcoming of the Kinked Demand Curve Model of Oligopoly

question 243

Multiple Choice

One shortcoming of the kinked demand curve model of oligopoly is that it does not explain

• A)why the marginal revenue curve is kinked.
• B)how the current price gets determined.
• C)what the level of profits is for the firm.
• D)why the firm is a least-cost producer.

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Definitions:

Consideration

In contract law, the value (which could be an object, service, money, or promise) that is given in exchange for a promise or performance by another party.

Adequacy

The quality or state of being sufficient, suitable, or appropriate for a particular purpose.

Consideration

Something of value exchanged between parties in a contract, required for the agreement to be legally binding.

Legally Sufficient Consideration

An element of contract law that requires something of value to be exchanged between the parties involved.