In a Cournot oligopoly with N firms and identical marginal costs, the relationship between the price elasticity of demand for the firm and that of the market is:
A. EF = NEM.
B. EF = N/EM.
C. EF = EM.
D. EF = EM/N.
Answer: A
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A) decreases when income increases. B) increases when income increases. C) decreases when population increases. D) increases when population increases.
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A) is upward-sloping. B) is horizontal. C) is downward-sloping. D) is found by adding up the marginal cost curves for all firms in the industry.