Title: The kinked demand curve theory suggests that a firm is likely to keep its price unchanged unless ...
Post by: stevengu246 on May 19, 2020
The kinked demand curve theory suggests that a firm is likely to keep its price unchanged unless there are substantial shifts in revenue or cost curves. A kinked demand curve is shown in the following diagram.
The kink is due to the firm's belief that its competitors
▸ will set a price at the kink of the demand curve.
▸ will match all price increases and reductions.
▸ will match any price increase it makes but will not match a price reduction.
▸ will not match a price increase but will match any price reduction.
The kink is due to the firm's belief that its competitors
▸ will set a price at the kink of the demand curve.
▸ will match all price increases and reductions.
▸ will match any price increase it makes but will not match a price reduction.
▸ will not match a price increase but will match any price reduction.
Title: The kinked demand curve theory suggests that a firm is likely to keep its price unchanged unless ...
Post by: Isack on May 19, 2020
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