Figure 12.2.1
-In comparing the Cournot equilibrium with the competitive equilibrium,
A) both profit and output level are higher in Cournot.
B) both profit and output level are higher in the competitive equilibrium.
C) profit is higher, and output level is lower in the competitive equilibrium.
D) profit is higher, and output level is lower in Cournot.

Question

Figure 12.2.1
-In comparing the Cournot equilibrium with the competitive equilibrium,
A) both profit and output level are higher in Cournot. 
B) both profit and output level are higher in the competitive equilibrium. 
C) profit is higher, and output level is lower in the competitive equilibrium. 
D) profit is higher, and output level is lower in Cournot.

Quizplus · Accepted Answer

In Cournot equilibrium, firms have market power and restrict output to raise prices, leading to higher profits but lower output compared to the competitive equilibrium, where firms are price takers and produce more at lower profits.

Figure 12.2.1 -In Comparing the Cournot Equilibrium with the Competitive Equilibrium