What is the most likely response by rivals when an oligopolist cuts its price to increase its sales?
A)Raise their prices.
B)Ignore the change.
C)Cut their prices.
D)Reduce their costs.

Question

Quizplus · Accepted Answer

When an oligopolist cuts its price to increase its sales, the most likely response by rivals is to cut their prices as well to remain competitive and to prevent losing market share. Ignoring the change or raising their prices can lead to a decrease in sales, which is why cutting their prices is the best response. Reducing their costs may also be a possible response, but it is typically a long-term strategy and may not have an immediate impact on sales.

What Is the Most Likely Response by Rivals When an Oligopolist