What is the basis of the kinked-demand model? Explain the reason for the gap in the oligopolists

Question:

What is the basis of the kinked-demand model? Explain the reason for the gap in the oligopolists’ marginal-revenue curve. How does this model explain price rigidity in oligopoly?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Introduction to Corporate Finance

ISBN: 978-0324657937

2nd edition

Authors: Scott B. Smart, William L Megginson

See More Books

Question Posted: Aug 05, 2013 03:38 AM

See More Questions

What is the basis of Alan Rugmans argument that most multinationals are still more regional than global? What factors inhibit firms from becoming truly global?
What is the basis of a futures contract? Give a simple example to explain your answer. What does convergence of the basis mean with respect to a futures contract?
What is the basis of the reasoning for a panregional approach?
From the work sheet, prepare the following: 1. Closing entries for Gimbel's Gifts and Gadgets in a general journal. 2. A post-closing trialbalance. Gimbel's Gifts and Gadgets Work Sheet For Year...
Lost Creek's 1 -hr unit hydrograph at the Chamberlain Avenue crossing is shown in the following table. Determine the expected flow rate in the creek at that location if a 2-hr storm produces 2.0 cm...
The bank portion of last month's bank reconciliation for Yap Ltd. at February 28 was as follows: The adjusted cash balance per bank agreed with the cash balance per books after the bank...
Two pairs. You read in a book on poker that the probability of being dealt two pairs in a five-card poker hand is 1/21. Explain in simple language what this means.
Assume that today is September 12. You have been asked to help a British client who is scheduled to pay 1,500,000 on December 12, 91 days in the future. Assume that your client can borrow and lend...
v Sheridan Orthotics Company distributes a specialized ankle support that sells for $ 40. The company's variable costs are $ 30 per unit; fixed costs total $ 380,000 each year. (al) Calculate...
Fill in the table using the following information. Assets required for operation: $4,000 Case Afirm uses only equity financing Case Bfirm uses 30% debt with an 8% interest rate and 70% equity Case...
Explain, using the prisoners dilemma analysis, why cooperation can be mutually beneficial, but if conditions prevent cooperation or collusion from happening, the outcome is worse for both parties.
Why is advertising prevalent in many oligopolies, especially when industry demand is inelastic? Illustrate your answer by assuming that with advertising, a firms demand curve has price elasticity of...
What functional groups might the following molecules contain? (a) A compound with a strong absorption at 1710 cm1 (b) A compound with a strong absorption at 1540 cm1 (c) A compound with strong...
The employee.class.php file contains an abstract, base class named Employee . One of the attributes of the class is an object of Person . This demonstrates one of the three relationship types among...
A direct shear test is performed on a saturated specimen of loose sand. A normal stress equal to 100 kPa is applied and a maximum shear stress of 75 kPa is measured in the shear test. Determine the...
How does budgeting help managers? Budgeting helps managers determine if their goals are ethical and achievable. Budgeting helps managers determine if their goals are reasonable and achievable....
If the 230-lb block is released from rest when the spring is unstretched, determine the velocity of the block after it has descended 5ft . The drum has a weight of 70lb and a radius of gyration of...
A B C D E F 1 Frequency : Monthly 2 Loan Amount: 150000.00 3 Interest Rate: 7.25% 4 Term(years): 30.00 5 No. of payments in a year: 12 time(s) 6 Periodic Rate: 0.60% =C3/C5 7 Total number of payment:...
Lump sums and interest rates. What is the relationship between interest rate changes and present values? What about future values? Why do these relationships exist?
A fast-food restaurant averages 150 customers per hour. The average processing time per customer is 90 seconds. a. Determine how many cash registers the restaurant should have if it wishes to...
Discuss and describe the Almon polynomial lag. Discuss in detail how it differs from the Koyck lag.
Haslett Inc., which produces a single product, has prepared the following standard cost sheet for one unit of the product. Direct materials (8 pounds at $2.50 per pound) .$20 Direct labor (3 hours at...
The direct materials and direct labor data shown on the next page pertain to the operations of Solario Manufacturing Company for the month of August. Instructions(a) Compute the total, price, and...
During March 2010, Hinton Tool & Die Company worked on four jobs. A review of direct labor costs reveals the following summary data. Analysis reveals that Job A257 was a repeat job. Job A258 was a...
Hite corporation intends to issue $160,000 of 5% convertible bonds with a conversion price of $40 per share. The company has 40,000 shares of common stock outstanding and expects to earn $600,000...
Your portfolio has a beta of 1.17, a standard deviation of 14.3 percent, and an expected return of 12.5 percent. The market return is 11.3 percent and the risk-free rate is 3.1 percent. What is the...
Slow Roll Drum Co. is evaluating the extension of credit to a new group of customers. Although these customers will provide $198,000 in additional credit sales, 13 percent are likely to be...

What is the basis of the kinked-demand model? Explain the reason for the gap in the oligopolists

Question:

Step by Step Answer:

The main focus of the model is on the shape of the demand curve facing a firm Unlike typical downwar...View the full answer

Introduction to Corporate Finance

Students also viewed these Economics questions