Narrbegin Exhibit 9.3 Kinked demand curves
-In Exhibit 9.3, in a kinked-demand oligopoly model, D₁ represents the:

Question

Narrbegin Exhibit 9.3 Kinked demand curves -In Exhibit 9.3, in a kinked-demand oligopoly model, D₁ represents the:

Quizplus · Accepted Answer

D₁ represents the demand curve that is more elastic for price increases above a certain point, in this case, $50. This is because in a kinked-demand oligopoly model, firms believe that if they increase their prices above a certain level, competitors will not follow, leading to a significant loss in market share and a more elastic demand curve for the price increase.

Narrbegin Exhibit 9.3 Kinked Demand Curves