According to the figure shown,if Nike charges a high price,then Adidas should:
A) charge a high price.
B) charge a low price.
C) leave the market.
D) give an ultimatum.

Question

According to the figure shown,if Nike charges a high price,then Adidas should:
A) charge a high price. 
B) charge a low price. 
C) leave the market. 
D) give an ultimatum.

Quizplus · Accepted Answer

The figure shows a kinked demand curve for Adidas, indicating that if Nike raises their price, Adidas should not follow suit and raise their price as well. Instead, Adidas should keep their price low to maintain market share and prevent losing customers to Nike who may opt for more affordable options. Therefore, the best choice for Adidas is to charge a low price.

According to the Figure Shown,if Nike Charges a High Price,then