In the kinked demand curve what is assumed?
A) That a price cut will not be followed by rivals.
B) A price increase will be followed by rivals.
C) Rivals cooperate when setting prices.
D) Increasing the price will not be followed by rivals.

Question

Quizplus · Accepted Answer

In the kinked demand curve model, it is assumed that if a firm raises its price, rivals will not follow, leading to a loss of market share for the firm that increased its price.

In the Kinked Demand Curve What Is Assumed