If a firm in an oligopoly is said to face a kinked demand curve, what do you know to be true about the kink?
A) It represents the maximum price and profit.
B) It occurs at the only output level where the firm suffers loss.
C) It occurs where marginal revenue is zero.
D) It is not a characteristic of an oligopoly.
E) It occurs at the current price

Question

Quizplus · Accepted Answer

The kink in a kinked demand curve for an oligopoly occurs at the current price, reflecting the hypothesis that rivals will not follow price increases but may match price decreases.

If a Firm in an Oligopoly Is Said to Face