A kinked demand curve consists of an elastic range for price increases and a less elastic range for price decreases.

Question

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This is correct. The kinked demand curve theory suggests that firms face two different demand curves, one with a relatively elastic range of prices for price increases and one with a less elastic range for price decreases. As a result, firms may be hesitant to change prices because they fear losing market share to competitors.

A Kinked Demand Curve Consists of an Elastic Range for Price