3.9 Consider the Cournot model with n firms.

The inverse linear market demand function is p = a - bQ. Each of the n identical firms has the same cost function C(qi) = Aqi + 12 Bqi 2, where a 7 A. In terms of n, what is each firm’s Nash equilibrium output and profit and the equilibrium price?

As n gets very large (approaches infinity), does each firm’s equilibrium profit approach zero? Why? M