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A-Level Economics · Kinked demand (oligopoly) diagram question
Which point is the KINK — the going price the firm is currently charging?
The diagram
The answer
Point A. Point A, price P* = £6 at output Q* = 4. The two halves of the demand curve meet there, and neither direction is worth moving in. The kink is at A: the going price P* = £6. Above it the demand curve is flat (elastic), below it steep (inelastic) — the corner where the two behaviours meet is exactly where the firm sits.
Test yourself properly
This is one of 6 questions on the kinked demand (oligopoly) diagram — every corner lettered, every wrong answer diagnosed.
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