both firms in a Cournot duopoly D. QL 20; QF15. 4. Both firms in a Cournot duopo

Question

both firms in a Cournot duopoly D. QL 20; QF15. 4. Both firms in a Cournot duopoly would experience lower profits if A. there was an increase in marginal production costs. B. each firm simultaneously increased output above the Nash equilibrium level. C. one firm reduced output below the Cournot Nash equilibrium level, while the other firm continued to produce its Cournot Nash equilibrium output. D. there was an increase in marginal production costs and ne firm reduced output below Nash equilibrium level, while the other firm the Cournot continued to produce its Cournot Nash equilibrium output. 1T Alexander College - Managerial Economics

Explanation / Answer

Answer :- Option B). Each firm simultaneously increased output above the Nash equilibrium level.

Explanation :- Both firms will earn higher profits in a cournot duopoly if each firm simultaneously reduced / decreased output below the Nash equilibrium level. Conversely, both the firms will earn lower profits in a cournot duopoly if each firm simultaneously increased / raised the output level below the Nash equilibrium level.

Conclusion :- Option B).

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