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QUESTION 2 The demand curve faced by a monopolistically competitive firm is: flat. kinked. upward-sloping. downward-sloping QUESTION 3 Without a product differentiation, the demand curve for a monopolistically competitive firm would look like that of: O a monopoly firm. O a perfectly competitive firm. an oligopoly firm. a duopoly firm. This gives rise to the kinked-demand curve ABC as shown in the graph. P is the prevailing market price. Therefore, there is a kink in the demand curve at this market price. The segment of the demand curve that lies above the kink is more elastic because an increase in price by an oligopolist will result in no change in price by its competitors. Firms face a kinked demand curve if, when one firm decreases its price, other firms are expected to follow suit in order to maintain sales. When one firm increases its price, its rivals are unlikely to follow, as they would lose the sales' gains that they would otherwise receive by holding prices at the previous level.
The Kinked Demand Curve, is the economical graph that shows why oligopolists tend to adopt a common price -to achieve the greatest price and output. The Hilmer committe, estabilished 1993, is a government body who acts in the interests of recommendations of National Competition policies.
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The marginal revenue curve corresponding to this kinked demand curve is composed of two discontinuous dotted line segments. Now, assume that the prevailing price in the market is NPo, that Which tivo remote do i have.
Apr 30, 2014 · 7.5.2. The kinked demand curve A third model of oligopoly involves the kinked demand curve. This model helps to explain why prices are sticky in oligopolistic industries, that is, why prices don't rapidly adjust to changes in supply and demand. Jul 02, 2020 · The kinked-demand theory is illustrated in Figure and applies to oligopolistic markets where each firm sells a differentiated product. According to the kinked-demand theory, each firm will face two market demand curves for its product. At high prices, the firm faces the relatively elastic market demand curve, labeled MD 1 in Figure.