Exhibit 10-4 Kinked demand curves
In Exhibit 10-4, the exhibit represents a kinked-demand oligopoly model. Suppose the current price is $50. If one firm in the oligopoly now attempts to raise price, all firms will:
A. follow along demand curve D1.
B. follow along demand curve D2.
C. ignore this price increase and cause the price-raising firm to move along D1.
D. ignore this price increase and cause the price-raising firm to move along D2.
Answer: C
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