If an oligopolist's demand curve has a "kink" in it,then:
A) the oligopolist's marginal cost curve has a break in it.
B) the oligopolist need not fear entry into the industry by new firms.
C) the oligopolist's competitors will not react to its price changes,either up or down.
D) over some interval,a change in the oligopolist's marginal cost will not cause a change in the oligopolist's profit-maximizing price.

Question

Quizplus · Accepted Answer

If an oligopolist's demand curve has a kink, it means that the competitors in the market react differently to price changes above and below a certain price level. Therefore, the oligopolist's profit-maximizing price will be at the kink point, and a change in its marginal cost will not cause it to change its price as long as it remains within the kink range. This creates a stable price and output level for the oligopolist in the short-run, but it also makes it difficult for the firm to increase its market share or profits through price changes.

If an Oligopolist's Demand Curve Has a "Kink" in It,then