2. The following paragraphs provide a description of the strategy used by Morrisons to raise its sales41:

Morrisons, one of the “big four” supermarkets in the UK, has been losing market share to some discount chains in recent years. Its sales fell by 3.2 percent in 2013.

In order to compete with those discount chains and the other supermarkets at par with it, Morrisons is going to slash the price of a basket of everyday products, such as bread, eggs, chicken breasts, minced beef, fresh fruit, and vegetables.

After Morrisons’ announcement of its strategy, all of its traditional rivals, Sainsbury’s, Tesco, and Asda, have pledged to follow the price reduction.

The market is expecting a price war among the

“big four” supermarket chains.

Explain how the discussion of Morrisons’ strategy and the reaction of its rivals relates to the kinked demand curve model