Economics - Cournot Model

posted by .

There is one firm with a marginal cost of 0. It's monopoly price is 10. Another firm enters, also with zero marginal cost. Using the Cournot model, would would the new oligopoly price be?

Can this question be answered without more information about the demand for the product? If not, then assume a elasticity of demand of 0.2.

I am trying to make a very simple model what happens when a new firm enters the market for a prescription drug. That's why elasticity of demand is low, if you're sick price doesn't matter too much.

Now that I think about it, you do have to know the elasticity of demand. Sorry, should have thought that through a bit more.

Respond to this Question

First Name
School Subject
Your Answer

Similar Questions

  1. Economics

    For the following characteristic say whether it describes a perfectly competitive firm, a monopolistically competitive firm, monopoly firm, or neither. Equates marginal revenue and marginal cost I would think that it would be each …
  2. Economics

    For the following characteristic say whether it describes a perfectly competitive firm, a monopolistically competitive firm, monopoly firm, or neither. a. Has marginal revenue less than price. I would think this would be neither. b. …
  3. Managerial Economics--Help!

    I just need help in reviewing my answers...they are all true/false questions..THANKS!!! 1. A principal-agent problem occurs when managerial decisions are inconsistent with the firm’s revenue maximizing objective. False 2. A firm …
  4. Need help Reviewing Managerial Economics

    just need help in reviewing my answers...they are all true/false questions..THANKS!!! 1. A principal-agent problem occurs when managerial decisions are inconsistent with the firm’s revenue maximizing objective. False 2. A firm making …
  5. Check over Economics HW

    I just need help reviewing my HW answers...they are all true/false questions..THANKS!!! 1. A principal-agent problem occurs when managerial decisions are inconsistent with the firm’s revenue maximizing objective. False 2. A firm …
  6. PLEASE HELP- managerial economics

    I just need an answer check on these true/ false questions, PLEASE: 1. A principal-agent problem occurs when managerial decisions are inconsistent with the firm’s revenue maximizing objective. False 2. A firm making less than a normal …
  7. Economics

    Yeah, so I'm in urgent need of help with this homework. 1. Assume that in a perfectly competitive market, a firm's costs and revenue are: Marginal cost = average variable cost at $20 Marginal cost = average total cost at $30 Marginal …
  8. managerial economicsQ4

    Consider a Cournot duopoly, composed of firms A & B ¡V which produce identical products and face identical costs. (a) Draw a set of reaction functions in one diagram for this Cournot duopoly. (b) Label the monopoly outputs that would …
  9. Economics

    Two firms produce the same good and compete against each other in a Cournot market. The market demand for their product is P = 204 - 4Q, and each firm has a constant marginal cost of $12 per unit. MR1 = 204 - 8q1 - 4q2. Let q1 be the …
  10. Managerial Economics

    1. A principal-agent problems occur when managerial decisions are not consistent with the firm's shareholders' interests. T 2. A firm making more than a normal profit may still be experiencing an economic loss. T 3. An inferior good …

More Similar Questions