The kinked Oligopoly Demand curve refers to a demand curve with two different segments having two distinct rates of elasticity that join to form a kink. The kinked-demand curve helps to explain the rigidity in Oligopoly price. The kinked-Oligopoly demand curve consists of a more elastic segment showing price increases and a less elastic segment showing price decreases.Know More
The Oligopoly demand curve comprises of two segments with a relative rate of elasticity based on the independent decision-making of oligopolistic companies. The demand curve indicates that firms have a belief that if they make any change in prices of their products, all other competitors will also change their prices. For instance, if they increase their prices then their competitors will also increase and vice-versa.
Oligopolistic firms face downward sloping demand curves, but the elasticity depends on how the competitors react to price and output changes. If competitors refuse to follow a price increase by one company, the demand becomes relatively elastic. If such a firm raises its prices, its total revenue falls. However, if rivals match the price reduction of one business to avoid losing market share, the demand becomes more inelastic. In such a scenario, a fall in price leads to a decline in total revenue.Learn more about Writing
Price elasticity of demand illustrates how the quantity demanded of a good is affected by the change in price of that good. The determinants of price elasticity of demand are the availability of substitutes, size, durability and time.Full Answer >
Price elasticity of demand has four determinants: product necessity, how many substitutes for the product there are, how large a percentage of income the product costs, and how frequently its purchased, according to Economics Help. By using these determinants, businesses can estimate how a change in the price affects demand.Full Answer >
A demand curve is a graphical representation of the demand of a product based on its price. Demand curves are downward sloping, demonstrating the law of demand that states that the quantity of a product or service demanded moves in the opposite direction of its price.Full Answer >
There is no supply curve in a monopolistic market because the monopolist searches the market demand curve for the profit maximizing price, rather than simply accepting the market price. Because there is only one seller, the monopolist has market power.Full Answer >