Firm One and Firm Two Compete as a Cournot Oligopoly

question 40

Multiple Choice

Firm one and firm two compete as a Cournot oligopoly.There is an increase in marginal cost for firm one.Which of the following is not true?

• A)Firm one will produce less.
• B)Firm two will produce more.
• C)Both firm one's and firm two's reaction functions are shifted.
• D)Profits of firm one will decrease.

---

Definitions:

Sinking Fund

A savings fund accumulated over time for the purpose of paying off debt or replacing a large expense in the future.

Yield to Maturity

The total return anticipated on a bond if the bond is held until its maturity date.

Coupon Rate

The interest rate stated on a bond or fixed-income security, representing the percentage of its face value paid to the holder annually.

Bond Prices

The market value of bonds, which can fluctuate based on changes in interest rates, credit quality of the issuer, and market demand.