The existence of a kinked demand curve under oligopoly conditions may result in
A)volatile prices
B)competitive pricing.
C)prices above the monopoly price.
D)an increase in the coefficient of variation of prices.
E)price rigidity

Question

Quizplus · Accepted Answer

The kinked demand curve theory suggests that firms in an oligopoly will face a demand curve that is more elastic for price increases and less elastic for price decreases. This leads to price rigidity, as firms are discouraged from changing prices due to the asymmetric response of competitors.

The Existence of a Kinked Demand Curve Under Oligopoly Conditions