PRICE (S)0Figure 25.1D2DIE2000QUANTITYDID2Consider the above kinked demand curve graph representing a firm in an oligopoly market. Which of the following statements istrue? ODemand curve D2 assumes that rivals match any price changes.Demand curve D₁ assumes that rivals match any price changes.Demand curves D₁ and D2 both assume that rivals will not match any price changes.Demand curves D₁ and D2 both assume that rivals match any price changes.

The kinked demand curve is a concept used to explain the pricing behavior of firms in an oligopoly,…

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e kinked demand curve graph representing a firm in an oligopoly market.

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

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Chapter1: Making Economics Decisions

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Question

PRICE (S)
0
Figure 25.1
D2
DI
E
2000
QUANTITY
DI
D2
Consider the above kinked demand curve graph representing a firm in an oligopoly market. Which of the following statements is
true?

O
Demand curve D2 assumes that rivals match any price changes.
Demand curve D₁ assumes that rivals match any price changes.
Demand curves D₁ and D2 both assume that rivals will not match any price changes.
Demand curves D₁ and D2 both assume that rivals match any price changes.

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