What are the advantages and disadvantages of kinked demand theory model?



Answers:
Kinked demand theory is fantastic when you are analysing a problem involving a good for which demand is 'kinked'. If you are thinking about most goods, then demand is not kinked, and the theory is useless.

Your question is like asking 'what are the advantages and disadvantages of a car'. If you want to get from one place to another and they are a reasonable distance apart, thena car if just what you need. If you are trying to get the lid off a bottle of softdrink, then a car doesn't really help - what you need is a bottle opener.
A theory is a theory - without advantages or disadvantages. Kinked demand sounds more like an hypothesis to me.

http://stumblingandmumbling.typepad.com/.
I agree with psstthok, wholeheartedly.

Sash.

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