The kinked demand curve model of oligopoly assumes that the price elasticity of demand

Which two of the following statements are true? a) A simple monopoly firm always earns super normal profit b) Sweezy's kinked demand curve model is the best known model explaining relatively more satisfactory behaviour of oligopoly firm for price rigidity c) A perfectly competitive firm is price - taker d) Firms under monopolistic competition earn only normal profits Choose the correct option from those below

A

a) and d)

B

b) and d)

C

b) and c)

D

a) and c)

Which two of the following statements are true?
I. A simple monopoly firm always earns super normal profit
II. Sweezy's kinked demand curve model is the best known model explaining relatively more satisfactory behaviour of oligopoly firm for price rigidity
III. A perfectly competitive firm is price-taker
IV. Firms under monopolistic competition earn only normal profits
Choose the correct option from those below

A

I and IV

B

II and IV

C

II and III

D

I and III

The kinked demand curve model of oligopoly assumes that

A

Response to a price increase is less than the response to a price decrease

B

Response to a price increase is more than the response to a price decrease

C

Elassticity of demand is constant regardless of whether price increases or decreases

D

Elasticity of demand is perfectly elastic if price increases and perfectly inelastic if price decreases

The Kinked demand curve model of oligopoly was developed by

A

Augustin Cournot

B

Stackelberg

C

Edgeworth

D

Sweezy

Match List I with List II: List I (Pricing Strategies) List II (Description) (A) Ramsay pricing (I) Setting a high price when a product is first introduced and gradually lowering price as it gains scale (B) Price skimming (II) Firm charges lower price (than the ongoing price) to gain market entry (C) Cost plus pricing (III) Price deviations from marginal cost should be inversely proportional to price elasticity of the product (D) Penetration pricing (IV) It is full cost pricing strategy that also includes mark up for target return, degree of competition, price elasticity and availability of substitutes. Choose the correct answer from the options given below:

A

(A) - (III), (B) - (IV), (C) - (I), (D) - (II)

B

(A) - (II), (B) - (I), (C) - (III), (D) - (IV)

C

(A) - (III), (B) - (I), (C) - (IV), (D) - (II)

D

(A) - (I), (B) - (IV), (C) - (II), (D) - (III)

Who, among the following economists, used the technique of kinked demand curve to explain price rigidity under oligopoly?

A

Paul Sweezy

B

Hall and Hitch

C

Chamberlin

D

Stigler

Despite differences in cost of production the oligopolists win not vary the prices of their products as per which combination of the following models?
1. Collusion model
2. Cournot's model
3. Kinked Demand model
4. Price Leadership model
Select the correct option:

A

Both 1 and 2

B

Both 3 and 4

C

Both 1 and 4

D

1, 2 and 3

Statement I Point price elasticity of demand in terms of marginal and average revenues can be measured with the following formula $$\frac{{AR}}{{AR - MR}}.$$
Statement II The point price elasticity of demand is the product of the slope of the demand function and the ratio between corresponding price and quantity.

A

Both the statements are correct

B

Both the statements are incorrect

C

Statement I is correct, while Statement II is incorrect

D

Statement I is incorrect, while Statement II is correct

In the context of oligopoly, the kinked demand curve hypothesis is designed to explain

A

Price and output determination

B

Price rigidity

C

Price leadership

D

Collusion among rivals

In an oligopoly market, the kinked demand curve explains

A

Collusion among rival firms

B

Average variable cost curves

C

Short-run average cost curves

D

Long-run average cost curves

The kinked demand curve model of oligopoly assumes that the price elasticity of demand

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