The key disadvantage of the kinked-demand model is that it:
A) explains why firms may collude, but it does not explain how they interact.
B) does not explain why prices may be rigid in an oligopoly.
C) requires the assumptions of perfect competition.
D) only holds under price leadership.
B
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Models describing the determination of the money supply and the Fed's role in this process normally focus on ________ rather than ________, since Fed actions have a more predictable effect on the former
A) reserves; the monetary base B) reserves; high-powered money C) the monetary base; high-powered money D) the monetary base; reserves
If the quantity demanded exceeds the quantity supplied in a market, then the result is which of the following?
a. Deadweight loss b. Inefficiency c. Underproduction d. Each of these are true.
Explain the relationship between opportunity costs and money costs. Can they be treated as identical?
Investment decreases by $300 billion, government expenditure is unchanged, and exports increase by $500 billion. As a result, autonomous expenditure ________, the total expenditure ________, and equilibrium real GDP ________
A) increases by $800 billion; increases; increases by more than $800 billion B) increases by $200 billion; increases; increases by more than $200 billion C) decreases by $300 billion; decreases; decreases by more than $300 billion D) is unchanged; is unchanged; is unchanged E) increases by $500 billion; is unchanged; increases by more than $500 billion