In the kinked demand curve model of non-collusive oligopoly, which one of the following is the most likely explanation for price rigidity?
Marginal cost is constant across all possible levels of output.
Raising or lowering the market price will result in a decrease in total revenue.
Demand is highly price-inelastic for any price increase above the current equilibrium.
Firms will actively collude to fix prices if any individual firm attempts to change theirs.
