The kinked demand curve theory of oligopoly assumes that rival firms?

Question

a. react to price increases.

b. react to price increases and decreases.

c. do not react to price changes.

d. react to price decreases.

Answer 1

d.react to price decreases.

Answer 2

d.react to price decreases.

If other firms offer lower prices, they have to lower their prices as well in order to maintain market share, but they don't react when other firms raise their prices, because they gain more customers, so it's actually good for them.