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

question 346

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:

Central Limit Theorem

A statistical theory that states that the distribution of sample means approximates a normal distribution as the sample size becomes larger, regardless of the population's distribution.

Sample Mean

The average value obtained from a sample, used as an estimate of the population mean.

Population Standard Deviation

A measure of the dispersion or spread of all the data points in a population from its mean value.

Central Limit Theorem

A statistical theory stating that the distribution of sample means approximates a normal distribution as the sample size becomes larger, assuming all samples are identical in size, regardless of the population's distribution.