The following diagram illn tracts the Cournot model. It shows how and B ph lucks share the total market and adjust output (1101 prices) and how they maximise their profit.
In this diagram (30.1) SB i~ the total demand Let The unit cost be zero i.e. MC = O. Therefore. MR is also zero. MR is zero at Before U enters the market, A OA = 1 AU. The price i~ or !!i\’ing maximum profit OAPe. Then B etc: s the market and produce All v.r equilibrium output and price arc achieved. more anti more firms enter, the) will produce output approaching the competitive’ output. If the number of firms goes up to N the)’ will produce