With Cournot competition, oligopoly firms decide on the quantity to produce. There is an equilibrium, whereeach firm chooses its production that is a best-response to the other firms' production levels. The equilibriumquantity and price is in between the competitive and monopoly market outcomes.To answer this question, you will want to use an appropriate graph on a piece of scratch paper. Otherwise,you are just guessing.Suppose that Coke and Pepsi are the only two firms in the cola market. There is Cournot competitionbetween the two firms. The marginal cost of making a bottle of cola is constant at $2/bottle. Now supposethat the marginal cost of making a bottle of cola increases to $4/bottle. In the new Cournot equilibrium, thequantity sold will begreater for both firms.less for both firms.the same for both firms.unknown, since there is not enough information to answer.

The market structure with few firms is known as an oligopoly. In case there are only two firms in a…

Suppose that Coke and Pepsi are the only two firms in the cola market. There is Cournot competition between the two firms. The marginal cost of making a bottle of cola is constant at $2/bottle. Now suppose that the marginal cost of making a bottle of cola increases to $4/bottle. In the new Cournot equilibrium, the quantity sold will be oooo greater for both firms. less for both firms. the same for both firms. unknown, since there is not enough information to answer.

Suppose that Coke and Pepsi are the only two firms in the cola market. There is Cournot competition between the two firms. The marginal cost of making a bottle of cola is constant at $2/bottle. Now suppose that the marginal cost of making a bottle of cola increases to $4/bottle. In the new Cournot equilibrium, the quantity sold will be oooo greater for both firms. less for both firms. the same for both firms. unknown, since there is not enough information to answer.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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