Suppose Cournot Duopolists Firms (A and B) Face the Same

question 98

Multiple Choice

Suppose Cournot duopolists firms (A and B) face the same market demand curve, and initially have identical costs. Firm A figures out a way of reducing its marginal cost. At the new Nash-Cournot equilibrium,

• A) firm A's price falls.
• B) firm A's output expands and firm B's output contracts.
• C) firm B's profits expand.
• D) the price charged by both firms increases.

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Definitions:

Quantity Demanded

The amount of a good or service that consumers are willing to purchase at a given price at a specific time.

Total Revenue

The total receipts from sales of goods or services provided by a company.

Perfectly Competitive Market

A market structure characterized by many buyers and sellers, all of whom have full information and the products are homogeneous, leading to no single buyer or seller being able to influence the market price.

Quantity Of Output

The total amount of goods or services produced by a company, sector, or economy during a specified period.