The Cournot model assumes that firm A maximizes its profit, holding firm B's output constant
What will be an ideal response?
True. Even though firm B does react to changes in firm A's output, firm A assumes that firm B does not react but instead holds its output constant.
You might also like to view...
Answer the following statement(s) true (T) or false (F)
1 The budget line is steep when X in inexpensive relative to Y. 2. When a consumer spends all of the income, it must be true that they are consuming a basket of goods on their budget line. 3. A consumer can not consume a basket of goods that lies closer to the origin than their budget line because they can not afford that basket 4. If the indifference curve is not tangent to the budget line, then we can be sure that the consumer is not at the optimum. 5. Marginal value equals relative price at the consumer's optimum, even if the optimum is a corner solution.
For a given upward-sloping supply curve, an increase in demand for chocolate chips will result in a:
a. ?lower equilibrium price and a higher equilibrium quantity. b. ?higher equilibrium price and a lower equilibrium quantity. c. ?lower equilibrium price and a lower equilibrium quantity. d. ?higher equilibrium price and a higher equilibrium quantity. e. ?decrease in the quantity supplied of chocolate chips.
Suppose two Bertrand price competitors have different constant marginal costs. In any simultaneous move Nash equilibrium, only the lower cost firm will produce.
Answer the following statement true (T) or false (F)
Refer to the figure above. At what level of output does the firm maximize profits?
A) 0 units B) 10 units C) 20 units D) 30 units