The Cournot model of oligopoly is one in which competing firms:
A)independently choose prices to maximize individual profits.
B)collusively choose prices to maximize joint profits.
C)independently choose quantities to maximize individual profit.
D)collusively choose quantities to maximize joint profits.

Question

Quizplus · Accepted Answer

The Cournot model of oligopoly assumes that firms independently choose the quantity of output they will produce in order to maximize their individual profits. This is a non-collusive model, meaning that firms do not coordinate with each other to set prices or output levels. Instead, each firm takes into account the other firms' production decisions when deciding on its own output level. This leads to a Nash equilibrium in which each firm produces a quantity of output that takes into account its competitors' output decisions.

The Cournot Model of Oligopoly Is One in Which Competing