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Question #48929

A major weakness of the kinked demand curve model of oligopoly is that ?

Options:

A) it assumes that firms believe that their rivals will not respond to any price change they initiate

B) it fails to explain how a firm arrived at its price and output decision initially

C) The model cannot be tested empirically.

D) Real-world pricing strategies are more simple than those assumed in this model

Answer: A major weakness of the kinked demand curve model of oligopoly is that it fails to explain how a firm arrived at its price and output decision initially.

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