The kinked demand curve model of oligopoly assumes that:

CA Foundation · Business Economics · MTP · September 2026
The kinked demand curve model of oligopoly assumes that:
(A) A. response to a price increase is less than the response to a price decrease
(B) B. response to a price increase is more than the response to a price decrease
(C) C. elasticity of demand is constant regardless of whether price increases or decreases
(D) D. elasticity of demand is perfectly elastic if price increases and perfectly inelastic if price

Suggested Answer and Working Notes:

Correct Answer: Option (A)

A. response to a price increase is less than the response to a price decrease

Topics: Price Determination in Different Markets

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