Question #2001120: Monopoly, Oligopoly, Monopolistic Competition

Question: Consider an oligopoly in which the inverse demand function is

\[p\left( \sum\limits_{i=1}^{n}{{{x}_{i}}} \right)=a-b\sum\limits_{i=1}^{n}{{{x}_{i}}},\,\,a,b>0\]

and each firm’s cost \(c\left( {{x}_{i}} \right)=c{{x}_{i}}\), \(0<c<a\). First, given n, determine the Cournot-Nash equilibrium output, profit, deviation of price from marginal cost and deadweight loss. Then evaluate the limits of all those as n tends towards infinity. Comment on the significance of your results.

Solution: The solution consists of 165 words (2 pages)
Deliverables: Word Document

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