Three firms compete in the style of Cournot. All firms have a constant returns to scale technology: There are no fixed cost and each firm's marginal cost is constant. The market demand is given by Q(P) = 9 - P. Firm 1's marginal cost is MC1 = 1, firm 2's marginal cost is MC2 = 2. Let MC3 be the marginal cost of Firm 3. Which of the below is a necessary condition so that q > 0 for all three firms in a Nash equilibrium? a. MC3 < 1 b. MC3 < 4 c. MC3 < 3 d. MC3 > 1 e. MC3 < 2

Three firms compete in the style of Cournot. All firms have a constant returns to scale technology: There are no fixed cost and each firm's marginal cost is constant. The market demand is given by Q(P) = 9 - P. Firm 1's marginal cost is MC1 = 1, firm 2's marginal cost is MC2 = 2. Let MC3 be the marginal cost of Firm 3. Which of the below is a necessary condition so that q > 0 for all three firms in a Nash equilibrium? a. MC3 < 1 b. MC3 < 4 c. MC3 < 3 d. MC3 > 1 e. MC3 < 2

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter15: Imperfect Competition

Section: Chapter Questions

Problem 15.3P

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