When oligopolistic firms engage in Cournot competition, the result is
A)a higher equilibrium price but lower equilibrium quantity than occur in a monopoly.
B)a higher equilibrium price but lower equilibrium quantity than occur in perfect competition.
C)a higher equilibrium price and higher equilibrium quantity than occur in a monopoly.
D)a lower equilibrium price and lower equilibrium quantity than occur in perfect competition.
E)the same equilibrium price and equilibrium quantity as occur in a monopoly.

Question

Quizplus · Accepted Answer

Under Cournot competition, oligopolistic firms choose their quantities simultaneously, taking the output of their rivals as given. This results in a higher equilibrium price but lower equilibrium quantity than occur in perfect competition, as firms limit their production to avoid driving the price down too much. However, the equilibrium price and quantity are still lower than that of a monopoly where the single firm has greater market power to set higher prices and produce larger quantities.

When Oligopolistic Firms Engage in Cournot Competition, the Result Is