Which of the following statements is true regarding profit-maximizing markup for a Cournot oligopoly with N identical firms? A) P[NE_F / (1 + NE_F)] = MC B) P = [(1 + NE_F) / NE_F]MC C) P[N(1 + E_F) / NE_F] = MC D) P = [NE_F / (1 + NE_F)]MC

Question

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The profit-maximizing markup for a Cournot oligopoly with N identical firms is given by P = [NE_F / (1 + NE_F)]MC. This means that the price should be set such that the quantity produced by the firm is such that the marginal revenue (which is the market price multiplied by the inverse of the elasticity of demand) is equal to the marginal cost of production. This markup formula takes into account the market structure (in this case, a Cournot oligopoly), the number of firms in the market (N), and the elasticity of demand (E_F).

Which of the Following Statements Is True Regarding Profit-Maximizing Markup