Based on the best available econometric estimates, the market elasticity of demand for your firm’s product is -2. The marginal cost of producing your product is constant at $60.

 

1)What is your optimal per unit price if you are a monopolist?

 

2)What is your optimal per unit price if you compete against one other firm in a Cournot oligopoly? What is your optimal per unit price if you compete against 20 other firms in a Cournot oligopoly?

 

3)What price pattern are you seeing between parts 1 and 2 Explain [at what price will you eventually sell your product if the number of firms continues to increase?] 

  

Answer rating: 100% (QA)

1 Optimal per unit price for a Monopolist For a monopolist the optimal per unit price is determined by setting marginal revenue equal to marginal cost ... View the full answer