When a company is faced by a kinked demand curve,the marginal revenue curve
A)will be upward sloping.
B)will be horizontal.
C)will always be zero at the quantity produced.
D)will be discontinuous.

Question

Quizplus · Accepted Answer

The kinked demand curve model, often used to describe oligopolistic markets, suggests that a firm faces a demand curve that is more elastic for price increases and less elastic for price decreases. This leads to a discontinuous marginal revenue curve because the slope of the demand curve changes abruptly at the current price, causing a gap or discontinuity in the marginal revenue curve.

When a Company Is Faced by a Kinked Demand Curve,the