Which of the following is true about the kink in the demand curve?

Question

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The kink in the demand curve occurs due to different rival responses to price increases and reductions. As the price increases, competitors may not follow suit and instead maintain their prices, leading to a significant drop in demand for the higher-priced product. On the other hand, if a price reduction is made, rivals may lower their prices as well, leading to a less significant increase in demand for the product. This difference in rival responses creates a kink in the demand curve, where the demand is less elastic above the price point than below it. The kink in the demand curve helps explain price rigidity or inflexibility, as businesses are hesitant to raise prices above the kink point due to the sharp drop in demand that would occur.

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