In the kinked demand curve theory, price elasticity of demand is at prices above the kink than below the kink. It follows that a price hike above the kink will reduce quantity demanded by than a price cut below the kink will quantity demanded.

In the kinked demand curve theory, price elasticity of demand is GREATER at prices above the kink than below the kink.

It follows that a price hike above the kink will reduce quantity demanded by A PROPORTIONALLY HIGHER AMOUNT than a price cut below the kink will REDUCE IN A LESS THAN PROPORTIONAL AMOUNT THE quantity demanded.

Explanation:

A kinked demand curve refers to a demand curve that is not a straight line, and the price elasticity of demand varies depending on the price of the goods or services. The kinked demand curve model is generally used when trying to explain how oligopolies exist and why their prices tend to be sticky or rigid above the kink of the curve (due to higher price elasticity).

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