Two firms are competing in a Cournot duopoly. Both firms have the same constant marginal cost. The market demand is linear.Suppose the constant marginal cost of firm 2 is increasing.Which of the following statements are correct? [There may be more than one correct statement.] The quantity of firm 1 and the quantity of firm 2 both go up. The quantity of firm 1 goes up and the quantity of firm 2 goes down. The market price goes down. The market price goes up. The quantity of firm 1 and the quantity of firm 2 go down. The quantity of firm 1 goes down and the quantity of firm 2 goes up. The market price stays the same.

In a Cournot duopoly, two firms compete on quantity, independently choosing the quantity of output…

Answered: Two firms are competing in a Cournot…

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter10: Monopolistic Competition And Oligoply

Section: Chapter Questions

Problem 11SQP

Related questions

Question

Two firms are competing in a Cournot duopoly. Both firms have the same constant marginal cost. The market demand is linear.

Suppose the constant marginal cost of firm 2 is increasing.

Which of the following statements are correct? [There may be more than one correct statement.]

		The quantity of firm 1 and the quantity of firm 2 both go up.
		The quantity of firm 1 goes up and the quantity of firm 2 goes down.
		The market price goes down.
		The market price goes up.
		The quantity of firm 1 and the quantity of firm 2 go down.
		The quantity of firm 1 goes down and the quantity of firm 2 goes up.
		The market price stays the same.