Which of the Following Is True of the Cournot Model

question 31

Multiple Choice

Which of the following is true of the Cournot model of a duopoly?

• A) The products sold by the firm are imperfect substitutes.
• B) The equilibrium price in a Cournot duopoly is higher than the price in a monopoly.
• C) The demand curve facing each firm is horizontal.
• D) The market price is determined by the output produced by the firm with the larger market share.
• E) The duopoly equilibrium lies between the pure-monopoly and purely competitive outcomes.

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Definitions:

Purchased Amount

The total volume or quantity of goods or services bought.

Normal Good

A good whose demand increases as consumers' income rises, holding all other factors constant.

Consumption

Consumption refers to the use of goods and services by households. It is a primary component of the economy, encompassing the spending on goods and services by consumers.

Income

Money received, especially on a regular basis, for work or through investments.