According to the kinked demand curve model, an oligopolist may face
A)more elastic demand than a monopolistic competitor.
B)less elastic demand than a monopolistic competitor.
C)more elastic demand if she raises her price than if she lowers her price.
D)less elastic demand if she raises her price than if she lowers her price.

Question

Quizplus · Accepted Answer

The kinked demand curve model suggests that an oligopolist faces more elastic demand when raising prices because competitors are unlikely to follow, leading to a loss of market share. Conversely, demand is less elastic when lowering prices, as competitors are likely to match price cuts, minimizing the gain in market share.

According to the Kinked Demand Curve Model, an Oligopolist May