Firms 1 and 2 Compete in a Cournot Duopoly

question 15

Multiple Choice

Firms 1 and 2 compete in a Cournot duopoly.If firm 2 adopts a strategy that raises firm 1's marginal cost:

• A)Firm 1's reaction function will shift up.
• B)Firm 2's reaction function will shift up.
• C)Firm 2's reaction function will shift down.
• D)Firm 1's reaction function will shift down.

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Definitions:

Department of Justice

A U.S. government's federal department tasked with law enforcement and the management of justice.

Mergers

The process by which two or more companies combine operations, often to increase competitiveness or to expand market share.

Glass-Steagall Act

A law enacted in 1933 to separate commercial banking from investment banking, aimed at reducing conflicts of interest and systemic risks.

Monopolies

Market structures characterized by a single seller dominating a particular market, possessing significant market power over the price and supply of a product or service.