It is mandatory to give a step by step explanation of the given question. Assume that demand is linear: P(Q) = A bQ, where Q = qi, and thatall firms have the same cost function: C; = cq; + f. What is the free-entrynumber of firms, assuming Cournot competition?

1. Inverse demand function: P(Q) = A - bQ 2. Individual firm's profit: πi = P(Q)qi - C(qi)…

Answered: Assume that demand is linear: P(Q) = A…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Assume that demand is linear: P(Q) = A bQ, where Q = qi, and that all firms have the same cost function: C; = cq; + f. What is the free-entry number of firms, assuming Cournot competition?