Consider an industry with Cournot competition. The industry demand curve is , where is the price of the product and is industry output. The industry faces a constant MC of 20 and there are no fixed costs. Suppose we are given that the equilibrium price is 56. Then in this equilibrium, the number of Cournot competitors must be
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Consider an industry with Cournot competition. The industry demand curve is P = 200 - Q, where P is the price of the product and Q is industry output. The industry faces a constant MC of 20 and there are no fixed costs. Suppose we are given that the equilibrium price is 56. Then in this equilibrium, the number of Cournot competitors must be (A) 2 (B) 3 (C) 4 (D) 5
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This question is on Cournot competition, part of Monopolistic competition and oligopoly in Microeconomics.
Firms choosing quantities simultaneously, reaction curves, and equilibrium as the number of firms or costs change.
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Question from the JNU SIS 2017 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.