The demand curve will be kinked if rival oligopolists
A)Match price increases but not price reductions.
B)Match price reductions but not price increases.
C)Match both price increase and price reductions.
D)Do not match price changes at all.

Question

Quizplus · Accepted Answer

The demand curve will be kinked if rival oligopolists match price reductions but not price increases, as this behavior leads to a situation where a firm faces a more elastic demand curve for price increases (since rivals won't follow, losing the firm customers) and a less elastic demand curve for price decreases (since rivals will match the decrease, not gaining the firm many new customers).

The Demand Curve Will Be Kinked If Rival Oligopolists