Asked by
Stephan Spano
on Oct 12, 2024
Verified
If each firm in an oligopolistic market matches price decreases but does not match price increases
A) prices become flexible.
B) prices become rigid where the marginal revenue and average cost curves intersect.
C) price wars ensue,and economic profits fall to zero.
D) prices become rigid at the prevailing market price.
Marginal Revenue
The additional income received from selling one more unit of a good or service, crucial for decision-making regarding output levels.
Average Cost
The cost per unit produced, computed by dividing the total of fixed and variable costs by the quantity of units produced, synonymous with average total cost.
- Acquire an understanding of the principle and impact of the kinked demand curve in markets dominated by a few sellers.
- Understand the factors causing price inflexibility in markets dominated by a few firms.
Verified Answer
MO
Learning Objectives
- Acquire an understanding of the principle and impact of the kinked demand curve in markets dominated by a few sellers.
- Understand the factors causing price inflexibility in markets dominated by a few firms.