[amp_mcq option1=”total revenue curve” option2=”marginal cost curve” option3=”average revenue curve” option4=”marginal revenue curve” correct=”option4″]<\/p>\n
The correct answer is D. marginal revenue curve.<\/p>\n
A kinked demand curve is a type of demand curve that is characterized by a sudden change in slope at a certain point. This type of demand curve is often seen in oligopolistic markets, where there are a small number of firms competing with each other.<\/p>\n
The kinked demand curve is reflected in a discontinuity in the marginal revenue curve. This is because, at the point where the demand curve kinks, the marginal revenue curve is also discontinuous. This discontinuity occurs because, at the kink, the firms in the oligopoly are all charging the same price. As a result, if one firm were to lower its price, it would not be able to increase its sales significantly, as the other firms would simply match its price reduction. However, if one firm were to raise its price, it would lose a significant amount of sales, as the other firms would not follow its price increase.<\/p>\n
The kinked demand curve can lead to a situation where the firms in the oligopoly are all stuck at a certain price level, even if this is not the profit-maximizing price. This is because, if any one firm were to change its price, it would not be able to increase its profits, as the other firms would simply match its price change.<\/p>\n
The kinked demand curve is a theoretical concept, and it is not always clear whether it actually exists in real-world markets. However, it is a useful model for understanding how oligopolistic markets work.<\/p>\n","protected":false},"excerpt":{"rendered":"
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