A major weakness of the kinked demand curve model of oligopoly is that ?

A. it assumes that firms believe that their rivals will not respond to any price change they initiate
B. it fails to explain how a firm arrived at its price and output decision initially
C. The model cannot be tested empirically.
D. Real-world pricing strategies are more simple than those assumed in this model

A market is defined as perfectly contestable if ?

A. entry to it and exit from it are both costless
B. entry to it and exit from it are both costly
C. entry to it costless, but exit from it is costless
D. entry to it is costly, but exit from it is costless

Marginal revenue is ?

A. the additional profit the firms earns when it sells an additional unit of output
B. the difference between total revenue and total cost
C. The ratio of total revenue to quantity.
D. the added revenue that a firm takes in when it increases output by one additional unit.

scroll to top