The Figure Given Below Represents the Output Choices of Each

question 61

Multiple Choice

The figure given below represents the output choices of each of the two oligopolists, given the choices of its competitor.QA and QB are the quantities of output produced by Producer A and Producer B.The marginal cost of production is zero for both producers.


-Refer to Figure .Suppose the government imposes a tax of $1.5 on each unit of A's output.Which of the following changes in the total output will be observed under Cournot equilibrium?

• A)Total output will decrease although the market share of the producers will remain same.
• B)Producer B's output will increase leading to a rise in total output.
• C)Producer A's output will decline leading to a fall in total output.
• D)The market share of the Producer A will fall, while that of B will increase.

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