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Unformatted text preview: o The KINK in the graph (3 questions) o Discontinuity gap of marginal revenue: o Because MC does not intersect with MR. Prices are sticky (inflexible prices): prices dont change for a long time. There is no profit maximization point in oligopoly unless MC is altered. o What cause discontinuity gap? Because of the kink demand curve. Price and leadership o Perfect collusion: derives from merger (written agreement between corporations) o Imperfect collusion price leaderships Monopolistic Competitions: o Large sellers o Products are differentiated. (major characteristics) o Chemical composition o Service What is the demand curve: o Monopolistic Competitions: downward sloping (an actual exam question) Total revenue: 0 p2 q1...
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