One Shortcoming of the Kinked Demand Curve Model of Oligopoly

question 158

Multiple Choice

One shortcoming of the kinked demand curve model of oligopoly is that it does not explain

• A) why the marginal revenue curve is kinked.
• B) how the current price gets determined.
• C) what the level of profits is for the firm.
• D) why the firm is a least-cost producer.

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Definitions:

Unpleasant Event

A negative experience that can cause emotional distress, discomfort, or dissatisfaction.

Contingent

Dependent on certain conditions or circumstances happening or being met.

Behavior

The responses or behaviors of an individual, whether human or animal, triggered by outside or inside factors.

Punishment

The imposition of a penalty or unpleasant consequence in response to an undesirable behavior, aimed at reducing or eliminating that behavior.