The Kinked-Demand Curve Model of Oligopoly Is Useful in Explaining

question 26

Multiple Choice

The kinked-demand curve model of oligopoly is useful in explaining

• A)the way that collusion works.
• B)why oligopolistic prices and outputs are extremely sensitive to changes in marginal cost.
• C)why oligopolistic prices might change infrequently.
• D)the process by which oligopolists merge with one another.

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Definitions:

Contract

A contract that is recognized and can be enforced by law, formed between two or more participants.

Simple Interest

Simple Interest is a calculation of interest that does not take into account the effect of compounding. It is typically calculated by multiplying the daily interest rate by the principal amount and the number of days that elapse between payments.

Early Redemption

The act of returning a financial instrument, such as a bond, before its maturity date, often subjecting the holder to a penalty or reduced return.

Term Deposit

A financial vehicle offered by banks that locks funds for a certain period, earning a specified interest rate.