The Kinked Demand curve theory assumes ?
Correct answer: C. Firms are competitive
- A. Firms cooperate
- B. Firms act as part of cartel
- C. Firms are competitive
- D. Firms are not profit maximisers
Explanation
The kinked-demand model assumes rival firms will match a price decrease but not a price increase, creating a kink and price rigidity in an oligopoly. It does not assume cooperation or cartel membership.
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