In a Cournot oligopoly with N-firms and identical marginal costs, the relationship between the price elasticity of demand for the form and that of the market is A)E_F = E_M. B)E_F = NE_M. C)E_F = E_M/N. D)E_F = N/E_M.

Question

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In a Cournot oligopoly, the firm's price elasticity of demand (E_F) is N times the market price elasticity of demand (E_M) because each firm considers the output of other firms as given, leading to a more elastic demand for its own product.

In a Cournot Oligopoly with N-Firms and Identical Marginal Costs