In the Cournot model of quantity competition, as the number of firms increases:
A) the total industry output declines asymptotically.
B) the difference between price and marginal cost increases.
C) price approaches average cost.
D) the equilibrium price steadily increases.
E) the price elasticity of demand for the product falls.

Question

Quizplus · Accepted Answer

In the Cournot model, as the number of firms increases, competition among them also increases, leading to a decrease in the price of the product. This process continues until the price approaches the average cost, making the market more competitive and efficient.

In the Cournot Model of Quantity Competition, as the Number