Oligopoly kinked demand graph doesn't make a sense to me Hello, so in class I learned about the kinked demand curve in oligopoly. Our teacher said that under the sticky price, the demand is inelastic. However, I don't understand how the demand can be inelastic when the marginal revenue is still positive.
As the graph notes, the red segment of the demand curve is relatively inelastic, meaning that compared to the blue segment, the red segment of demand is relatively insensitive to price changes. This does not mean that price elasticity anywhere on the red segment is less than 1 (which implies inelasticity in the absolute sense).