List of top Economics Questions on Oligopoly asked in CUET (PG)

The Kinked demand curve model can explain 

(A) The level at which price will be set by firms to maximize profits. 
(B) The level of price at which the kink will occur as well as the height of the kink. 
(C) The price rigidity in the face of changing costs and of high rivalry. 
(D) The implications for the volume of output owing to changing market demand. 
Choose the correct answer from the options given below:
 

In an oligopolistic market, firm i and firm j have constant marginal cost = c for an identical good. They compete to set prices Pi and Pj. The demand for total market demand Q, where if \(P_i > P_j\), the demand for firm i is 0. If \(P_i < P_j\), the demand for firm i is Q. If \(P_₁ = P_j\), then they share the market equally and hence the demand for firm i is \(\frac{Q}{2}\). In equilibrium, the prices of firms i and j are: