Two Identical Firms Compete as a Cournot Duopoly

question 77

Multiple Choice

Two identical firms compete as a Cournot duopoly.The demand they face is P = 100 − 2Q.The cost function for each firm is C(Q) = 4Q.Each firm earns equilibrium profits of:

• A) $1,024.
• B) $2,048.
• C) $4,096.
• D) $512.

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Definitions:

Positive Correlation

A relationship between two variables in which both variables move in tandem, meaning that as one variable increases or decreases, the other does as well.

Normal Curve

A symmetrical, bell-shaped curve that represents the distribution of many physical and psychological attributes.

Distribution

The act of sharing something out among a number of recipients, or the way in which something is spread or dispersed.

Regression Toward

Implies the statistical concept that extreme scores tend to fall back (regress) toward the mean (average) over time.