A market with N=20 identical firms compete on quantity (Cournot competition). The market price elasticity of demand is = -1.5, and the price elasticity of supply for N-1 of the firms is n-i = 1.5. What is the price elasticity of the residual demand curve facing firm i? O -30 O -50 O -58.5 -60

A market with N=20 identical firms compete on quantity (Cournot competition). The market price elasticity of demand is = -1.5, and the price elasticity of supply for N-1 of the firms is n-i = 1.5. What is the price elasticity of the residual demand curve facing firm i? O -30 O -50 O -58.5 -60

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter15: Imperfect Competition

Section: Chapter Questions

Problem 15.10P: Inverse elasticity rule Use the first-order condition (Equation 15.2 ) for a Cournot firm to show...

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Question

A market with N=20 identical firms compete on quantity (Cournot
competition). The market price elasticity of demand is = −1.5, and the
price elasticity of supply for N-1 of the firms is n-i = 1.5. What is the
price elasticity of the residual demand curve facing firm i?
O -30
O -50
O -58.5
O -60

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