in-what-way-does-the-kinked-demand-theory-explain-the-pricing-behavior-of-fast-f

Question

In what way does the kinked-demand theory explain the pricing behavior of fast-food chains like McDonald's and Burger King?

Accepted Answer

Price stability occurs because each chain fears losing customers if they change prices.

Answer

Price stability occurs because demand is perfectly inelastic.

Answer

Price stability occurs because of government regulation.

Answer

Price stability occurs because all chains have identical cost structures.