Figure 12-3

-Oligopolist A cuts price in an attempt to enlarge his share of the market.His competitors retaliate with identical price cuts.In this case, in Figure 12-3, oligopolist A will move from point A to which point?
A)B
B)C
C)D

Question

Figure 12-3
 
-Oligopolist A cuts price in an attempt to enlarge his share of the market.His competitors retaliate with identical price cuts.In this case, in Figure 12-3, oligopolist A will move from point A to which point?
A)B 
B)C 
C)D

Quizplus · Accepted Answer

In an oligopoly, if one firm cuts prices and others follow, the market price decreases but the quantity sold may not increase significantly. This scenario typically moves the firm along the demand curve to a point like D, where the price is lower but the quantity sold is not significantly higher.

Figure 12-3 -Oligopolist a Cuts Price in an Attempt to Enlarge His