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.

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Definitions:

Authority

The power or right to give orders, make decisions, and enforce obedience.

Aggressive Reaction

A behavioral response characterized by hostility or violence towards others, often as a result of provocation.

Mimicked Behavior

Refers to behavior that is imitated or copied from another person.

Hostile Intentions

Feelings or desires to cause harm or express aggression towards others.