The kinked demand model indicates that non-collusive firms in an oligopolistic i

Question

The kinked demand model indicates that non-collusive firms in an oligopolistic industry would: Ignore all price changes by his competitor. Match price cuts by his competitor, but ignore price increases. Match all price changes by his competitor Match price increases by his competitor, but ignore price cuts. Which of the following does not correctly complete the sentence? Collusive agreements are hard to maintain if there is a long lasting recession it is easy to detect and punish cheaters. other firms can easily enter the industry there are laws that restrict collusive agreements among oligpolists. Which of the following statements is false? Neither productive nor allocative efficiency is likely to occur in an oligopolistic industry Oligopolistic firms are less likely to implement technological innovations than purely competitive firms Foreign competition is bad for collusive agreements among oligopolists Oligopolies are considered by some less desirable than pure monopolies.

Explanation / Answer

1.)Kinked demand model indicates that firms match price cut by competitor and ignore price rises.So it is not profitable for competitor to increase or decrease its price.So correct option is b.

2)collusive agreements are hard to maintain if it is easy to detect cheaters.It is false.So correct option is B.

3)Correct option is B.

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