Which of the following statements are true? Select one or more: a. At the Nash e

Question

Which of the following statements are true?

Select one or more:

a. At the Nash equilibrium, the two firms are producing Pareto efficient levels of output.

b. At the Nash equilibrium, the market output is greater than in the case of a monopolist.

c. At the Nash equilibrium, the price of the good is lower than that in the case of a monopolist.

d. At the Nash equilibrium, the price of the good is greater than that in the case of a monopolist.

e. At the Nash equilibrium, the total profits are lower than in the case of a monopolist.

Explanation / Answer

(a) False. In case of a monopoly in Cournot duopoly, Nash equilibrium outcome is not pareto efficient.

(b) True. At Nash equilibrium, the market output is greater than in case of a monopolist.

(c) True.

(d) False.

(e) True. When compared with monopoly, any form of market will have lower profits than a monopolist.

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