If oligopolists start cutting prices to capture a larger market share,the result will be a
A)Movement up the market demand curve.
B)Movement down the market demand curve.
C)Leftward shift of the market demand curve.
D)Rightward shift of the market demand curve.

Question

Quizplus · Accepted Answer

If oligopolists start cutting prices, it will lead to a movement down the market demand curve as a result of increased quantity demanded by consumers who are price-sensitive. This is because a price cut will enable them to capture a larger market share by increasing their output and attracting customers from their competitors. However, this is only a short-term strategy since it will lead to a price war and lower profits for all firms in the industry.

If Oligopolists Start Cutting Prices to Capture a Larger Market