The Kinked-Demand Curve Model Helps to Explain Price Rigidity Because

question 85

Multiple Choice

The kinked-demand curve model helps to explain price rigidity because

• A) there is a gap in the marginal revenue curve within which changes in marginal cost will not affect output or price.
• B) demand is inelastic above and elastic below the going price.
• C) the model assumes firms are engaging in some form of collusion.
• D) the associated marginal revenue curve is perfectly elastic at the going price.

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Definitions:

Psychological Adjustment

The process of adapting to new, different, or changing circumstances, conditions, or environments.

Dissociative Amnesia

A psychological condition characterized by memory loss that is too extensive to be explained by ordinary forgetfulness and is not due to a neurological condition.

Psychological Disorders

Mental disorders characterized by persistent disturbance or dysfunction in behavior, thoughts, or emotions that causes significant distress or impairment.

Anterograde Amnesia

The inability to form new memories following the onset of an amnesia-causing event, despite typically retaining memories from before the event.