The Inverse Demand in a Cournot Duopoly Is P =

question 4

Multiple Choice

The inverse demand in a Cournot duopoly is P = a - b (Q₁ + Q₂) , and costs are C₁(Q₁) = c₁Q₁ and C₂(Q₂) = c₂Q₂.The Government has imposed a per unit tax of $t on each unit sold by each firm.The tax revenue is:

• A)t times the total output of the two firms should there be no sales tax.
• B)less than t times the total output of the two firms should there be no sales tax.
• C)greater than t times the total output of the two firms should there be no sales tax.
• D)none of the statements associated with this question are correct.

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