Which of the Following Is Cited as a Problem with the Kinked

question 66

Multiple Choice

Which of the following is cited as a problem with the kinked demand curve model?

• A)It assumes that firms do not attempt to maximize profits.
• B)It assumes that firms determine the profit-maximizing level of output by equating marginal cost and average variable cost.
• C)It does not explain how the equilibrium market price is determined.
• D)It does not explain the price stickiness that is routinely observed in oligopolistic markets.

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Definitions:

Karl Marx

A 19th-century philosopher, economist, and revolutionary, who developed the theory of Marxism, emphasizing the roles of class struggle, economic exploitation, and historical development in capitalism.

Alienated

The feeling of being estranged or disconnected from others, society, or oneself, often resulting in isolation and a loss of identity or meaning.

Adam Smith

A Scottish economist and philosopher, best known for his theories on free market economics and the ‘invisible hand’ concept.

Peasants

Historically, members of the lower social class in rural areas, typically farmers who own or rent small plots of land for cultivation.