Question

In a certain town, everyone spends a constant amount of money on sweets, whatever its price....

In a certain town, everyone spends a constant amount of money on sweets,
whatever its price. The sweets are produced at an average cost
constant by n equal companies. Show that if a> 0 then there is a Cournot equilibrium, but if a = 0 then there is no such equilibrium.

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Answer #1

equilibrium mean economic situation where supply and demand for certain good and service in marketand are same or we can say that equal. And average cost are the production cost per uint of output divided by the total cost

cornot equilibrium is economic model assumption which choose the output quantity. if a> is greater then zero mean having greater production of quantity that is why there is corunot equilibrium and if a=0 mean average production is zero that is why it is not in equilibrium. the main concept of counot is more quantities more profit.

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