The theory of the kinked demand curve is that a. although the firm sells a differentiated product, too many competitors exist to make it worthwhile speculating on responses to the firm's behavior.
b. freedom of entry will reduce profits to zero.
c. a firm's competitors will follow it in a price decrease but not follow it in a price increase.
d. firms are all seeking the position of joint profit maximization.

a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.

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