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KINKED-DEMAND CURVE: A demand curve with two distinct segments with different elasticities that join to form a kink. The primary use of the kinked-demand curve is to explain price rigidity in oligopoly. The two segments are: (1) a relatively more elastic segment for price increases and (2) a relatively less elastic segment for price decreases. The relative elasticities of these two segments is directly based on the interdependent decision-making of oligopolistic firms.
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Lesson 20: Oligopoly | Unit 3: Behavior
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Page: 14 of 24
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In this unit, you should have learned about:- Why oligopoly is characterized by interdependent decision making, because the actions of one firm invariably affect other firms in the industry.
- How interdependent decision making results from oligopoly firms that practice competition among the few.
- How intense competition among oligopoly firms often gives way to cooperation through price leadership, collusion, cartel, and merger.
- How oligopoly firms cooperate through collusion, by secretly set prices, limiting production, and acting like a monopoly.
- How price leadership can be used as an implicit form of collusion and that cartels are an explicit form of collusion.
- How cooperation among oligopoly firms can be formalized through mergers, the legal joining of two or more firms into a single firm.
- The differences between horizontal mergers, vertical mergers, and conglomerate mergers, and which is most likely to violate antitrust laws.
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ECONOMIC GOALS Five conditions of the mixed economy, including full employment, stability, economic growth, efficiency, and equity, that are generally desired by society and pursued by governments through economic policies. The five goals are typically divided into the three that are most important for macroeconomics (the macroeconomic goals of full employment, stability and economic growth) and the two that are most important for microeconomics (the microeconomic goals of efficiency and equity).
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PINK FADFLY
[What's This?]
Today, you are likely to spend a great deal of time waiting for visits from door-to-door solicitors wanting to buy either a wall poster commemorating next Thursday or a pair of gray heavy duty boot socks. Be on the lookout for florescent light bulbs that hum folk songs from the sixties.
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In the early 1900s around 300 automobile companies operated in the United States.
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"We succeed in enterprises (that) demand the positive qualities we possess, but we excel in those (that) can also make use of our defects." -- Alexis de Tocqueville, Statesman
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VSE
Vancouver Stock Exchange (Canada)
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