Which of the Following Is True

question 53

Multiple Choice

Which of the following is true?

• A) In Bertrand oligopoly markets, each firm believes that its rivals will hold their output constant if it changes its output.
• B) In Cournot oligopoly markets, firms produce an identical product at a constant marginal cost and engage in price competition.
• C) In Sweezy oligopoly markets, each firm believes rivals will cut their prices in response to a price reduction, but will not raise prices in response to price increases.
• D) In oligopoly markets, a change in marginal cost never has an effect on output or price.

---

Definitions:

Perfectly Competitive

A market structure characterized by many buyers and sellers, homogenous products, and free entry and exit, leading to efficient pricing and output levels.

Organic

Pertaining to or derived from living organisms, in food production referring to practices that do not use synthetic pesticides or fertilizers.

Profit

The profit achieved when the revenue generated from a business operation surpasses the expenses, costs, and taxes needed to maintain the operation.

External Effects

Also known as externalities, these are positive or negative consequences of economic activities experienced by unrelated third parties.