-The kinked demand curve indicates a situation in which an oligopolist will be:
A)interested in maintaining the going price even as costs change
B)eager to either raise or lower price
C)willing to raise price but not to lower it
D)eager to lower price but not to raise it
E)be willing to sell it product at exactly its average cost

Question

-The kinked demand curve indicates a situation in which an oligopolist will be:
A)interested in maintaining the going price even as costs change 
B)eager to either raise or lower price 
C)willing to raise price but not to lower it 
D)eager to lower price but not to raise it 
E)be willing to sell it product at exactly its average cost

Quizplus · Accepted Answer

The kinked demand curve model suggests that in an oligopolistic market, firms are more likely to keep prices stable even when costs change. This is because they assume competitors will not follow price increases (leading to a loss of market share) but will match price decreases (leading to lower profits for all).

-The Kinked Demand Curve Indicates a Situation in Which an Oligopolist