The kinked demand curve is based upon the assumption that an oligopolist's rival will:

a. Ignore a price cut, but follow a price increase.

b. Follow both a price cut and a price increase.

c. Ignore both a price cut and a price increase.

d. Follow a price cut, but ignore a price increase.

e. None of the above.

d. Follow a price cut but ignore a price increase.

An oligopolist faces a kinky demand curve for its products because of the contenders. At the point when an oligopolist increases the price of its product, its demand will decrease. As such, purchasers will move to different firms for less expensive items. Consequently, the demand will be elastic. It is obvious that other players in the market will ignore this increase in price.

Then again, if an oligopolist diminishes the value, the price, the consumers will shift to its product and hence form an inelastic demand curve. Thus, different firms will likewise follow it and diminishing their prices to stay in the opposition.c