"Kinked" demand curves:
A) are sometimes found in pure competition.
B) are inelastic above the "kink" and elastic below the "kink."
C) are typical of monopolistic competition.
D) tend to encourage a stable price in a product-market.
E) All of these alternatives are correct.

Question

Quizplus · Accepted Answer

Competing firms watch each other carefully for any price changes. If one competing firm increases or decreases its price the others are soon to follow. So, the competing firms find it wise to be at the kink.

"Kinked" Demand Curves