A decrease in firm 1's marginal cost will cause:
A. an upward shift in firm 2's reaction function, resulting in a new Cournot equilibrium where firm 1 is producing a lower quantity and firm 2 is producing a higher quantity.
B. a downward shift in firm 2's reaction function, resulting in a new Cournot equilibrium where firm 1 is producing a higher quantity and firm 2 is producing a lower quantity.
C. a downward shift in firm 1's reaction function, resulting in a new Cournot equilibrium where firm 1 is producing a lower quantity and firm 2 is producing a higher quantity.
D. an upward shift in firm 1's reaction function, resulting in a new Cournot equilibrium where firm 1 is producing a higher quantity and firm 2 is producing a lower quantity.
Answer: D
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Answer the following statement true (T) or false (F)
Does the experience of World War II demonstrate that government budget deficits and surpluses can be used to stabilize aggregate demand?
A) No, because the deficits run during the 1930s did not end the recession. B) No, because the fact that deficits or surpluses can alter aggregate demand does not prove they can stabilize it. C) Yes, because nominal GDP increased by more than the amount of the deficit in each wartime year. D) Yes, because World War II demonstrated the multiplier effect of deficits.
If the marginal tax rate is greater than the average tax rate, the tax structure is described as regressive
Indicate whether the statement is true or false
If the required reserve ratio is 20 percent and a bank has $100,000 in checkable deposits, then its: a. required reserves are $500,000. b. required reserves are $20,000. c. assets are $500,000
d. liabilities are $500,000. e. net worth is $500,000.