In an oligopoly, how does the demand curve typically behave if a firm raises its price?

In an oligopoly, the behavior of firms and their demand curves can be quite complex due to the interdependent nature of their market functions. When a firm raises its price, it typically faces a unique demand curve that is not perfectly elastic. This means that the firm will likely lose customers because a price increase can lead consumers to switch to competitors that have not increased their prices.

In this market structure, firms are acutely aware of how their pricing will affect their rivals' actions. If one firm raises its prices, there is a high likelihood that competitors will maintain their prices to capture the customers who are sensitive to price increases. Thus, customers may choose to buy from the other firms in the market instead, leading the firm that raised its price to lose market share.

The other response options do not accurately represent the dynamics of an oligopoly. For example, while it is possible that rivals might raise their prices, it is not a definitive outcome since they might choose not to follow the price increase, which leads to option A being too simplistic. Option C is inconsistent because a firm raising prices is unlikely to gain customers when alternatives are available at lower prices. Lastly, demand in an oligopoly is not perfectly elastic, as indicated in option D; rather