Which of the following observations is true?
A) Marginal analysis does not apply in oligopoly situations.
B) Marginal revenue drops fast in an oligopoly, at the kinked point.
C) In an oligopoly, setting the price at the level of the kink minimizes profit.
D) In an oligopoly, prices are relatively less "sticky" at the kinked point.
E) Price leadership does not occur in oligopoly situations.

Question

Quizplus · Accepted Answer

In an oligopoly with a kinked demand curve, marginal revenue drops sharply at the kinked point due to the different elasticities of demand above and below the kink.

Which of the Following Observations Is True