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In the kinked demand curve model of oligopoly, under what circumstances would an increase in marginal costs lead to an increase in the price?
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Efficiency
The optimal allocation and use of resources to produce goods and services in the most cost-effective and waste-free manner.
P > MC
Indicates a scenario in price (P) is greater than marginal cost (MC), suggesting that a firm could potentially increase profits by increasing production since each additional unit produced costs less than the price it would sell for.
Monopoly
A market structure in which a single seller controls the entire market for a good or service, with no close substitutes.
Monopoly Model
A market structure where a single seller dominates the market, facing no competition, resulting in high prices and restricted output.
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