Suppose you compete in a Cournot oligopoly market consisting of 6 firms.The equilibrium market price and quantity are $5 and 10 units, respectively.The marginal cost for each firm is $3.Based on this information we know the price elasticity of demand is

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The price elasticity of demand is given by the formula:Ed = (dQ/Q)/(dP/P)where dQ is the change in quantity demanded, Q is the original quantity demanded, dP is the change in price, and P is the original price.In this case, the equilibrium market price is $5 and the equilibrium market quantity is 10 units. If the price increases by $1, the quantity demanded will decrease by 2 units. Therefore, dQ = -2 and Q = 10. If the price decreases by $1, the quantity demanded will increase by 2 units. Therefore, dP = -1 and P = 5.Substituting these values into the formula, we get:Ed = (-2/10)/(-1/5) = 0.417Therefore, the price elasticity of demand is -0.417.

Suppose You Compete in a Cournot Oligopoly Market Consisting of 6