The diagram below shows an oligopolist kinked demand curve DD and current price and quantity at P and Q respectively.

The diagram below shows an oligopolist kinked demand curve DD and current price and quantity at P and Q respectively.

(i) Name the curve represented by the gap WZ
(ii) State Why the curve WZ is vertical to price axis
(iii) Advice when the oligopolist can raise and lower the price of the commodity

Expected Responses

1. Refer to 9str paper MR curve /MC Curve/ disjoint in the MR where  MC=MR curve i.e the equilibrium point.
2. Above price p /kink the demand curve is more /fairly elastic and less elastic/fairly inelastic below the price P0/Kuk/ if a firm raise price above P0 /Kerk other competing firm swill not follow suit bul if it lowers below P0 /Kirk all other low peting firms will follow suit.
3. When the eligopolist forms a collusion or a celtel with competing firms they can increase/lower /reduce the price.
4. When the oligopolies acquires a dominant position on the market/accept  egs of dominant position
5. The price cannot be increased /decreased/rained because it is rigid at the kelik/OPO 
6. The owner on roman II can be used as the answer far this section.

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