A major prediction of the kinked demand curve model is
A)price stability in oligopolies.
B)price instability in oligopolies.
C)stability of production costs in oligopolies.
D)instability of costs in oligopolies.

Question

Quizplus · Accepted Answer

The kinked demand curve model suggests that firms in an oligopoly will face a demand curve that is more elastic for price increases and less elastic for price decreases, leading to price stability as firms are discouraged from changing prices.

A Major Prediction of the Kinked Demand Curve Model Is