Which of the following is cited as a problem with the kinked demand curve model?
A) It assumes that firms do not attempt to maximize profits.
B) It assumes that firms determine the profit-maximizing level of output by equating marginal cost and average variable cost.
C) It does not explain how the equilibrium market price is determined.
D) It does not explain the price stickiness that is routinely observed in oligopolistic markets.
Correct Answer:
Verified
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