With a kinked demand curve model, the discontinuity of the marginal revenue curve suggests that
A) prices will be stable.
B) prices will be unstable.
C) demand will be stable.
D) marginal cost will be stable.

Question

Quizplus · Accepted Answer

The kinked demand curve model suggests that prices will be stable because firms are assumed to not change their prices due to the asymmetric reactions of competitors to price increases versus price decreases.

With a Kinked Demand Curve Model, the Discontinuity of the Marginal