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A kink in an otherwise linear demand curve. Note how marginal costs can fluctuate between MC1 and MC3 without the equilibrium quantity or price changing. The Kinked-Demand curve theory is an economic theory regarding oligopoly and monopolistic competition. Kinked demand was an initial attempt to explain sticky prices.
The kinked demand curve for a joint profit-maximizing oligopoly industry can model the behaviors of oligopolists' pricing decisions other than that of the price leader. Above the kink, demand is relatively elastic because all other firms' prices remain unchanged. Below the kink, demand is relatively inelastic because all other firms will ...
It is important to note that this graph is a simplistic example of a kinked demand curve. Kinked Demand Curve. Oligopolistic firms are believed to operate within the confines of the kinked demand function. This means that when firms set prices above the prevailing price level (P*), prices are relatively elastic because individuals are likely to ...
In order to distinguish themselves well, these firms can compete in price, but more often, oligopolistic firms engage in non-price competition because of their kinked demand curve. In the kinked demand curve model, the firm will maximize its profits at Q,P where the marginal revenue (MR) is equal to the marginal cost (MC) of the firm.
The average interest rate for a 30-year fixed mortgage stands at nearly 6.7%, well above an average rate four years ago of 2.6%, Freddie Mac data shows. A small rate cut by the Fed would not ...
price of food may account for some, but probably not all, of the increase in calories consumed as prices dropped. They propose a model of self-control based on hyperbolic discounting to explain why the increased availability of easy-to-consume snack foods has had a disproportionate effect on weight gain compared to other foods.
Fifty acres or 400 tons of the grapes have been left to rot on the vineyard due to too much supply and not enough demand. "They're turning to raisins. They'll just end up falling off," Schaefer said.
There's too much demand, not enough supply, so I think the price goes higher in 2025," he added. Wall Street is growing increasingly bullish on crypto, especially with Trump's second term in sight.