Please circle the correct answer 1 The kinked demand curve o

Please circle the correct answer. 1. The kinked demand curve of an oligopolist is based on the assumption that a) there is not product differentiation gnore price cut but follow price increase. c) Competitors will follow price cut but ignore price increase. d)Competitors will much both price and price increases 2. Which of the following plece is an Bustration of a homogeneous oligopo?y: a) scap and detergents b) typewnilters e) household laundry equipments Answer questions 3-6 on the basis of the following a. 3. This diagram potrays a) collusive oligopoly b) pure monopoly c) non-collusive ologopoly d) monopolistic competition 4 Equilbrium output is: a)Of c) oj b) on d) og

Solution

(1) (c)

The underlying assumption is that if one firm increases its price, other rivals do not increase their prices, but if one firm lowers its price, rival firms follow suit.

(2) (c)

Aluminium industry operates in oligopolistic market.

(3) (c)

This is a non-collusive oligopoly with kinked-demand model with assumptions made in Q(1).

(4) (a)

In the kinked-demand model, equilibrium output corresponds to the kink in the demand curve.