Which of the following statements is true in general about firm actions that are strategic substitutes?
A)Reaction functions are downward sloping & the more of the action one firm chooses, the more of the action the other firm chooses
B)Reaction functions are downward sloping & the less of the action one firm chooses, the less of the action the other firm chooses
C)Reaction functions are upward sloping & the more of the action one firm chooses, the more of the action the other firm chooses
D)Reaction functions are upward sloping & the less of the action one firm chooses, the less of the action the other firm chooses
E)In the Cournot model, quantities are strategic substitutes

Question

Quizplus · Accepted Answer

In the Cournot model, firms choose quantities, and these quantities are strategic substitutes, meaning that if one firm increases its quantity, the other firm will decrease its quantity.

Which of the Following Statements Is True in General About