If the Profit-Maximizing Markup Factor in a Three-Firm Cournot Oligopoly

question 25

Multiple Choice

If the profit-maximizing markup factor in a three-firm Cournot oligopoly is 2,what is the corresponding market elasticity of demand?

• A) −1/2
• B) −2/3
• C) −1.0
• D) −2.0

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Definitions:

Total Job Cost

The sum of all costs assigned to a specific job, including materials, labor, and overhead.

Predetermined Manufacturing Overhead

An estimated overhead cost calculated before the actual production starts, used in budgeting and setting product prices.

Markup

Markup is the amount added to the cost price of goods to cover overhead and profit, determining the selling price.

Overhead Applied

The portion of estimated overhead cost allocated to each unit of production or activity based on the predetermined overhead rate.