The existence of a kinked demand curve under oligopoly conditions may result in
A)price flexibility.
B)price rigidity.
C)competitive pricing.
D)None of the above

Question

Quizplus · Accepted Answer

The kinked demand curve under oligopoly conditions leads to price rigidity, as firms are hesitant to change their prices due to the potential of losing customers to their competitors. This results in a relatively stable price for the product or service, even if there are changes in production costs or demand. The other options, price flexibility and competitive pricing, are not accurate descriptions of the effects of a kinked demand curve in oligopoly conditions.

The Existence of a Kinked Demand Curve Under Oligopoly Conditions