A nonlinear acoustic instability of subcritical liquid-oxygen droplet flames burning in gaseous hydrogen environment are investigated numerically. Emphases are focused on the effects of finite-rate kinetics by employing a detailed hydrogen-oxygen chemistry and of the phase change of liquid oxygen. Results show that if nonlinear harmonic pressure oscillations are imposed, larger flame responses occur during the period that the pressure passes its temporal minimum, at which point flames are closer to extinction condition. Consequently, the flame response function, normalized during one cycle of pressure oscillation, increases nonlinearly with the amplitude of pressure perturbation. This nonlinear response behavior can be explained as a possible mechanism to produce the threshold phenomena for acoustic instability, often observed during rocket-engine tests.