The Price Elasticity of Demand for Melocotones Is Constant and Equal

question 3

Multiple Choice

The price elasticity of demand for melocotones is constant and equal to -2. The melocotone market is controlled by two Cournot duopolists who have different cost functions. One of the duopolists has a constant marginal cost of $675 per ton and produces 50% of the total number of melocotones sold. The equilibrium price of a ton of melocotones must be

• A) $1,800.
• B) $450.
• C) $900.
• D) $675.
• E) $1,350.

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