Kinked Demand Curve

Kinked Demand Curve

• Kinked Demand - When the demand curve changes angles.
• If firm A raises their price, the other firms will not follow so consumers will all switch to the competitors. So if firm A raises their price, the demand is ________. In the diagram below this would be any price ________ than $25.
• If firm A cuts their price, other firms will also cut price so they will not gain a lot of extra customers. When they cut the price, the demand is ________. In the diagram below this would be any price ________ than $25.