If Firms Are in Cournot Equilibrium

question 130

Multiple Choice

If firms are in Cournot equilibrium:

• A) each firm could increase profits by unilaterally increasing output.
• B) each firm could increase profits by unilaterally decreasing output.
• C) firms could increase profits by jointly increasing output.
• D) firms could increase profits by jointly reducing output.

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Definitions:

Future Value

The value of an investment or cash flow at a specified future date based on a certain interest rate.

Constant Dollar

An accounting method that adjusts financial statements for inflation, thereby allowing comparison of buying power across different periods.

Inflation

The rate at which the general level of prices for goods and services is rising, subsequently eroding purchasing power.

Initial Withdrawal

The first amount of money taken out from an investment or retirement account.