Two firms, A and B, are in the market and barriers to entry keep other firms from entering. The managers are involved in a Cournot oligopoly and the figure shows the best response curves for the two firms . In the Cournot equilibrium, Firm A produces ________ units per year and Firm B produces ________ units per year.
A) 250; 200 B) 400; 200 C) 250; 500 D) 200; 100
D) 200; 100
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A removal or depletion tax on an open-access resource increases the marginal private cost of using the resource by
a. zero b. the amount of the tax c. the marginal product of the resource d. the average private cost of using the resource e. the average social cost of using the resource
What are the two possible causes of market failure?
Choose the letter of the diagram in Figure 16.1 that Keynesians would use to illustrate the effects of stimulative fiscal policy on the economy.
A. a. B. b. C. c. D. d.
A perfectly competitive firm is currently producing an output level where price is $10.00, average variable cost is $6.00, average total cost is $10.00, and marginal cost is $8.00. In order to maximize profits, this firm should
A) increase the market price. B) shut down. C) decrease its output. D) increase its output. E) not change its output — this firm is at its profit-maximizing position.