In the circle model with constant marginal cost, each point on the circle will contain a firm in equilibrium if fixed entry costs are zero.

Question

Quizplus · Accepted Answer

In the case where fixed entry costs are zero, any potential entrant can enter the industry without facing any additional costs beyond the constant marginal cost. Thus, in equilibrium, we would expect to see a firm located at every point on the circle.

In the Circle Model with Constant Marginal Cost, Each Point