A Cournot Equilibrium Occurs Where the Reaction Functions for the Two

question 34

Multiple Choice

A Cournot equilibrium occurs where the reaction functions for the two firms

• A) intersect
• B) are farthest apart
• C) Neither answer is correct

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Definitions:

Market Price

The ongoing rate at which an asset or service is offered for buying or selling in a certain market.

Short Run

A period in economics during which at least one input or resource is fixed, limiting immediate capacity adjustments.

Zero Economic Profit

A condition in which a firm's total revenue equals its total costs, implying normal profit but no excess profit over what is considered normal in the industry.

Long Run

A period in economics where all factors of production and costs are variable, and firms can adjust all inputs as needed.