Suppose a Cournot oligopoly is operating in a market where demand is linear and marginal costs are constant.We can conclude that the total output supplied is

Question

Quizplus · Accepted Answer

In a Cournot oligopoly, firms make output decisions simultaneously and independently based on their rivals' expected behavior. Given linear demand, the firms' best response functions will be linear. Under constant marginal costs, the firms will produce where their marginal costs equal their marginal revenue. In equilibrium, the firms will produce slightly less than in perfect competition, resulting in 2/3 of the competitive output. Therefore, the correct answer is C.

Suppose a Cournot Oligopoly Is Operating in a Market Where