Firms 1 and 2 Compete in a Cournot Duopoly

question 20

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 will increase its output.
• B)Firm 2 will gain market share.
• C)Firm 2 will enjoy lower profits.
• D)All of the statements associated with this question are correct.

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Definitions:

Principal Amount

The original sum of money borrowed in a loan or the initial amount of investment, excluding any interest or dividends.

60-Day Note

A financial instrument that is payable within 60 days, often used in business transactions as a form of short-term borrowing.

Intermediate Calculations

Calculations performed as steps toward solving a final problem or arriving at a final figure, often used in mathematical or financial analyses.

Maturity Date

The specified date on a financial instrument at which the principal (or final payment) is due to be paid.