Both Firms in a Cournot Duopoly Would Experience Lower Profits

question 16

Multiple Choice

Both firms in a Cournot duopoly would experience lower profits if:

• A) there was an increase in marginal production costs.
• 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) there was an increase in marginal production costs 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:

Stress

A physical or emotional response to external pressures or demands that can be perceived as challenging or threatening.

Eating

The act of consuming food to provide nutritional support for the body.

Displacement

In psychology, a defense mechanism where an individual redirects emotional feelings from their original source to a substitute target.

Behaviour

The way an individual acts or responds when faced with external or internal triggers.