Both Firms in a Cournot Duopoly Would Enjoy Higher Profits

question 47

Multiple Choice

Both firms in a Cournot duopoly would enjoy higher profits if:

• A) the firms simultaneously reduced output below the Nash equilibrium level.
• B) each firm simultaneously increased output above the Nash equilibrium level.
• C) one firm reduced output below the Cournot Nash equilibrium level, while the other firm continued to produce its Cournot Nash equilibrium output.
• D) the firms simultaneously reduced output below the Nash equilibrium level and one firm reduced output below the Cournot Nash equilibrium level, while the other firm continued to produce its Cournot Nash equilibrium output.

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Definitions:

Observational Learning

A learning process in which individuals learn by watching the behaviors of others and the consequences of those behaviors.

Latent Learning

A form of learning that occurs without any obvious reinforcement of the behavior or associations that are learned.

Negative Punishment

The removal of a stimulus following a given behavior in order to decrease the frequency of that behavior.

Negative Reinforcement

A process in behavior modification that involves increasing the likelihood of a behavior by removing or avoiding an aversive stimulus as a consequence of the behavior.