Firms 1 and 2 Compete in a Cournot Duopoly

question 21

Multiple Choice

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

• A) firm 2 will increase its output.
• B) firm 1 will increase market share.
• C) firm 1 will suffer lower profits.
• D) All of the statements associated with this question are correct.

---

Definitions:

Purchases and Sales

This involves transactions related to buying (purchases) and selling (sales) goods or services, critical to determining a business's revenue and inventory levels.

LIFO Perpetual

A perpetual inventory system method that assumes the last items added to inventory are the first ones sold, under the Last-In, First-Out principle.

Inventory Value

The total cost of all the items held by a company for resale or production purposes, calculated at a specific point in time.

Cost of $200

A set expense value amounting to two hundred dollars.