In a kinked demand curve model, competitors _____ by a rival firm.
A) follow any price change
B) ignore any price change
C) match any price increase and ignore any price decrease
D) ignore any price increase and match any price decrease

Question

Quizplus · Accepted Answer

In a kinked demand curve model, competitors tend to ignore any price increase by a rival firm, as they aim to increase their market share by keeping their prices lower. Conversely, they match any price decrease to maintain their market share, leading to a situation where prices become relatively stable.

In a Kinked Demand Curve Model, Competitors _____ by a Rival