The amount of output produced by two firms in a Cournot oligopoly setting is greater than that produced by a monopoly,but smaller than that which would be produced if the market were perfectly competitive.

Question

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In a Cournot oligopoly setting, two firms will produce more output than in a monopoly because they are competing with each other. However, the amount of output produced will still be less than if the market was perfectly competitive where there are numerous firms competing resulting in lower prices and higher output.

The Amount of Output Produced by Two Firms in a Cournot