UGC NET Follow
October 5, 2021 7:22 pm 30 pts
Here. the demand curve WOuld be elastic and CIlaii is smaller than OP x 0Q. The logical conclusion from this analysis would therefore be that oligopolists would benefit from keeping prices stable so long as all could enjoy reasonable profits at the established price. The kinked demand curve theory also has other implications. A normal demand curve becomes less elastic as price falls, but the oligopolies' demand curve becomes less elastic suddenly at the kink. Mathematically, this causes the MR curve to _Ssuddenly change to a different position, as can be seen in Figure, so that a discontinuity exists along the vertical line YZ above output 0Q,. MC Y MC P
• 0 Likes
• Shares
• Rucha rajesh shingvekar
This implies that the MC curve can increase or decrease between this discontiuity, without necessitating a change in the profit maximising output OQ1 or price OP1 - the oligopolist...