Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
(Kinky Demand Curve) Short Period
Kinked demand curve was first used by Prof. Paul M. Sweezy to elucidate price rigidity under oligopoly. In an oligopoly market, firm knows that if it increases price, other firms won't follow; though if price is reduced, other firms will follow price reduction. In some respect, price output analysis in oligopoly is simple. Because every seller wants to avoid uncertainty, each oligopolistic firm will adhere to the point of kink where itis safe and where it can anticipate the reaction of its rivals. Though the firm will neither decrease nor increase price.
Figure: Kinked Demand Curve
This is a significant consequence of the existence of the kink in demand curve of firm. Since of the vertical section in MR, which is uncertainty range, without affecting the price or level of output. Under these situations, equality between MR and MC won't determine the point of equilibrium. The profits will, though, be determined as in any other market, by difference between AC andAR. With a given marginal cost of production, OP is more about to be the profit-maximising price. Length of the discontinuity portion in MR relies on the relative elasticity of demand at point E of AR. The greater the elasticity of demand of portion of AR above point E and the lower the elasticity of demand of the portion of AR below point discontinuity portion of MR, the bigger will be discontinuity portion of MR. Figure above demonstrates that price is fixed at OP and output is OM.
Q. Explain about Inventory Economies? Inventory Economies: Role of inventories is to aid the firm in meeting random changes in the output and the input sides of the operations
Buffer stocks and stabilization funds In this case the government buys up part of the supply when output is excessive, stores this surplus, and resells it to consumers in time
Direct control and Moral Suasion Without actually using the above weapons, the central bank can attempt simply to use "moral suasion" to persuade the commercial banks to restr
MONOPOLISTIC PRACTICES The following practices may be said to characterize monopolies. Exclusive dealing to supply and collective boycott Producers agree to supply onl
The Market Demand Curve Quantity of a commodity that an individual is willing to buy at a particular price of the commodity during a specific time period, given his money incom
Assignment about law of variable proportion
how manager can apply scarcity and oppotunity cost in managerial decision making
Explain Managerial economics according to Mote and Paul Haynes, Mote and Paul: "Managerial economics refers to those characteristics of economics and its tools of analysis mos
Equilibrium in a single market model A single market model has three variables: the quantity demanded of the commodity (Q d ), the quantity supplied of the commodity (Q s ) an
A chemical producer dumps toxic waste into a river. The waste decreases the population of fish, decreasing profits for the local fishing industry by $100,000 per year. The firm cou
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd