For a kinked demand curve, the marginal revenue curve is:
A) positively sloped.
B) a horizontal line.
C) a vertical line.
D) discontinuous.
E) above the demand curve.

Question

Quizplus · Accepted Answer

The marginal revenue curve for a kinked demand curve is discontinuous. This is because the demand curve is made up of two straight lines with different slopes meeting at the point of the kink, which creates a discontinuity in the marginal revenue curve. Above the kink, the marginal revenue curve is more elastic, while below the kink, it is more inelastic. Therefore, the marginal revenue curve is not a smooth line, but rather two separate lines that do not connect smoothly at the kink point.

For a Kinked Demand Curve, the Marginal Revenue Curve Is