The Cournot Reaction Function

question 48

Multiple Choice

The Cournot reaction function:

• A)maps out the best response a firm could take for each possible action of the rival firm.
• B)maps out how firms work together to maximize profits.
• C)is most applicable to monopoly markets.
• D)shows how each firm makes its profit-maximizing decision while considering the entire market demand, the same as a monopolist.

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Definitions:

Inversely

A term describing a relationship between two variables whereby they move in opposite directions; as one increases, the other decreases.

Coulomb

A quantity of electrons equal to 6.253 x 10^18.

Amperage

The strength of an electric current measured in amperes, indicating the flow rate of electric charge through a conductor.

Electrical Circuit

A network consisting of a closed loop, giving a return path for electric current to flow, which includes at least one power source and one electrical component.