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The Kinked-Demand Model of Oligopoly Assumes That

Question 206

Multiple Choice

The kinked-demand model of oligopoly assumes that


A) rivals will ignore price increases but will match price cuts.
B) rivals will ignore price cuts but will match price increases.
C) the oligopolistic firms are colluding.
D) a firm faces a more elastic demand curve if it cuts its price, and less elastic if it raises its price.

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