Based on the best available econometric estimates, the market elasticity of demand for your firm’s product...

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Based on the best available econometric estimates, the market elasticity of demand for your firm’s product...

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?]

business economics

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