two firms (A and B), no collusion, a given market price and output
The assumptions of a kinked demand curve model in oligopoly are __________________________.
rival firm B reacts to a price change in firm A
The shape of a oligopolist's demand curve depends on how the
In a kinked demand curve model, if rival firm B will match price change, then firm A's demand curve will be _________.
In a kinked demand curve model, if rival B ignores a price change, firm A's demand curve will be __________.
matched by rival firm A
A kinked demand curve model has behavioral assumptions. Price cuts will be _________________.
ignored by rival firm B
A kinked demand curve model has behavioral assumptions. Price increases will be _______________.
In a kinked demand curve model, the shape of firm A's demand curve will be relatively ______ above the kink and relatively _________ below the kink.
In a kinked demand curve model, the shape of firm A's marginal revenue curve will be ________.
gap, the given output level
In a kinked demand curve model, the shape of firm A's marginal revenue curve will have a _____ at ___________.
price stability or rigidity
The major prediction of kinked demand curve models are that it explains __________________ which is often observed in oligopoly markets.
the profit maximizing price and output
A prediction of the kinked demand curve model is that unit costs rise or fall within limits (gaps) without affecting _______________.
The shortcoming of a kinked demand curve model is that it does not explain how given or going ______________ is initially determined.
maximize joint profit
Cartels behave like a monopoly in that they set a common price to ______________ of their members.
tacit understandings and gentlemen's agreements
Informal understandings are also known as _________________.
there is no written agreement
Informal understandings are illegal, but difficult to detect because _____________.
in the industry follow.
In price leadership, when the leader changes price, other firms _____________.
cheating, different demand and cost curves, recession, number of firms, entry of new firms
The obstacles of collusion are __________________________________.
secret price concessions
In cheating, an individual firm may find it profitable to make_______________ to selected to selected buyers to increase sales.
to agree on a single price
Demand and cost curves may differ substantially, making it difficult ___________________.