Suppose the market demand elasticity is constant at -2,and there are three identical firms in the oligopolistic market.A Cournot firm's MPL = 1.2L^-0.5,then the labor demand for a Cournot firm is A)PL^-0.5. B)0.6PL^-0.5. C)0.2PL^-2. D)PL^-2.

Question

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The correct answer is A because the labor demand for a Cournot firm is MPL = 1.2L^-0.5, and the market demand elasticity is constant at -2. So, the labor demand for a Cournot firm is PL^-0.5.

Suppose the Market Demand Elasticity Is Constant at -2,and There