Consider an oligopoly (firm A, firm B and firm C). Firms compete in price simultaneously. The marginal (and average) costs of the three firms are: MC_A = 3, MC_B = 1 and MC_C = 1. Oligopolists produce a homogeneous good. Then in the Nash equilibrium of the game:

a)firm A chooses a price equal to its marginal cost while firms B and C choose the same price, slightly lower than that practiced by firm A: pA = MCA while pB = pC = 3- where is a number small and positive b)all firms choose a price equal to 3: p_A = p_B = p_C = 3 firm A chooses a price equal to its marginal cost while firms B and C choose the same price, slightly lower than that practiced by firm A: pA = MCA while pB = pC = 3- where is a small number and positive c)all firms choose a price equal to 1: pA = pB = pC = 1

d)each firm chooses a price equal to its marginal cost: p_i = MC_i where i = A, B, C

I personally think the correct answer is a), but my teacher says the right one is c). I honestly think she's wrong, since, in order to maximize the profit, firms B e C should chose the option a). If they chose a price equal to the MC the profit will be 0.