Refer to the diagram for a non-collusive oligopolist. Suppose that the firm is initially in equilibrium at point E, where the equilibrium price and quantity are P and Q. Which of the following statements is correct?
A) Demand curve D₁ assumes that rivals will match any price change initiated by this oligopolist.
B) Demand curves D₁ and D₂ both assume that rivals will ignore any price change initiated by this oligopolist.
C) Demand curves D₁ and D₂ both assume that rivals will match any price change initiated by this oligopolist.
D) Demand curve D₂ assumes that rivals will match any price change initiated by this oligopolist.
Correct Answer:
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