Relative to the Case in Which Two Identical Firms Choose

question 3

Multiple Choice

Relative to the case in which two identical firms choose quantities simultaneously in a Cournot model,if one of the two moves first and is observed by the other,how would this affect its output?

• A)it would increase its output,more so if it could deter the other from entering the market at all.
• B)it would increase its output,but would moderate this increase if it were concerned about entry deterrence.
• C)it would decrease its output if it couldn't deter entry and increase it otherwise.
• D)it would decrease its output whether or not it wanted to deter entry.