Is it likely that oligopolistic firms will be in both a kinked demand curve situation and also engage in price leadership? Why or why not?
What will be an ideal response?
No, it is not. The models are not compatible in their assumptions. Specifically, price leadership assumes that rivals will follow a price increase, while the kinked demand curve model assumes that rivals will not follow such a lead. Because of the incompatibility, it is impossible for an oligopoly to conform to both models at the same time.
You might also like to view...
Changes in exchange rates are usually expressed in percentage terms.The percentage rate of appreciation for one currency will be close to the rate of depreciation for the other nation whenever:
a. the change in the rate is very small. b. the exchange rates are very different in quantitative terms. c. the change in the rate is very large. d. one exchange rate is 50% more than the other one at the time of the change
Which of the following is most important if the living standards of people residing in a country are going to improve?
a. growth of population b. growth of per capita GDP c. growth of the money supply d. growth of government expenditures as a share of GDP