Firms 1 and 2 Compete in a Cournot Duopoly

question 18

Multiple Choice

Firms 1 and 2 compete in a Cournot duopoly.If firm 2 adopts a strategy that,inadvertently,lowers 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:

Professional Hockey

Professional hockey encompasses the teams, players, and activities related to the sport of hockey played at the highest level of skill, often as a career, including leagues such as the National Hockey League (NHL).

Consumer Equilibrium

The point at which the quantity of goods purchased by a consumer, given their income and prices of goods, maximizes their utility.

Total Utility

Total utility is the total satisfaction or pleasure a person derives from consuming a particular quantity of goods and services.

Marginal Utility

The change in satisfaction or utility that an individual gains from consuming an additional unit of a good or service.