In which of the following situations would the seller(s) be most likely to face a "kinked" demand curve?
A) A medium-sized airport with one gift shop.
B) A small town--some distance from any others--with three "off brand" gasoline stations at the major intersection.
C) Men's clothing stores in downtown Las Vegas.
D) A small community with one electric power company.
E) A farmers' market with one farmer selling honey.

Question

Quizplus · Accepted Answer

In a small town with three "off brand" gasoline stations, the sellers are likely to face a kinked demand curve due to oligopolistic competition. Each station may be reluctant to change prices because competitors are likely to match price decreases but not price increases, leading to a kinked demand curve.

In Which of the Following Situations Would the Seller(s) Be