Which statement concerning the kinked demand curve model of oligopoly is false?
A)It addresses the question of price "stickiness."
B)It assumes when one oligopolist raises the price, all others will follow.
C)The portion of the demand curve above the "kink" is more elastic than the portion below.
D)The firm's marginal costs can sometimes shift without changing the profit-maximizing price and output.

Question

Quizplus · Accepted Answer

The kinked demand curve model assumes that if one oligopolist raises the price, others will not follow, leading to a loss in market share for the firm that increased its price.

Which Statement Concerning the Kinked Demand Curve Model of Oligopoly