Economics · Market Structures

The kinked demand curve theory of oligopoly suggests that:

Verified Solution4 OptionsUpdated: October 2026👁️1 View

1Demand is perfectly elastic at the prevailing price
2Price increases are matched, but price cuts are not
3Price cuts are matched by rivals, but price increases are not✓
4Firms can freely raise prices without losing demand

Correct answer

Price cuts are matched by rivals, but price increases are not

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