Suppose Cournot Duopolists Firms (A and B) Face the Same

question 98

Multiple Choice

Suppose Cournot duopolists firms (A and B) face the same market demand curve, and initially have identical costs. Firm A figures out a way of reducing its marginal cost. At the new Nash-Cournot equilibrium,

• A) firm A's price falls.
• B) firm A's output expands and firm B's output contracts.
• C) firm B's profits expand.
• D) the price charged by both firms increases.

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Definitions:

Intersection

A point at which two or more roads cross or intersect, or the act of intersecting.

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