A major prediction of the kinked demand curve model is
A) price stability in oligopolies.
B) price instability in oligopolies.
C) stability of production costs in oligopolies.
D) instability of costs in oligopolies.

Question

Quizplus · Accepted Answer

The kinked demand curve model suggests that firms in an oligopoly will experience price stability because they expect that competitors will match price decreases but not price increases, leading to a reluctance to change prices.

A Major Prediction of the Kinked Demand Curve Model Is