Based on the best available econometric estimates, the market elasticity of demand for your firms product is
Fantastic news! We've Found the answer you've been seeking!
Question:
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?]
Related Book For
Managerial Economics and Business Strategy
ISBN: 978-0071267441
7th Edition
Authors: Michael R. baye
Posted Date: