Exhibit 10-4 Kinked demand curves
-In Exhibit 10-4, in a kinked-demand oligopoly model, D₂ represents the:

Question

Exhibit 10-4 Kinked demand curves -In Exhibit 10-4, in a kinked-demand oligopoly model, D₂ represents the:

Quizplus · Accepted Answer

D₂ represents the demand curve applicable to any price decrease below $50 in a kinked-demand oligopoly model. The kink in the demand curve represents a point of price rigidity where each firm assumes that any price increase beyond this point will result in lost market share and any price decrease below this point will lead to intense price competition.

Exhibit 10-4 Kinked Demand Curves