Which of the following is true about the kink in the demand curve?
A)It is the result of different rival responses to price increases and reductions.
B)It leads to an explanation of price flexibility.
C)It occurs because rivals do not respond to price reductions.
D)It occurs because rivals match price increases.

Question

Quizplus · Accepted Answer

The kink in the demand curve is attributed to the observation that firms will not follow a rival's price increase but will follow a price decrease, leading to a situation where demand is more elastic above the current price than below it. This creates a "kink" in the demand curve at the current price.

Which of the Following Is True About the Kink in the Demand