In a Cournot oligopoly, each firm:
A)maximizes profit subject to its competitor's output.
B)is caught in a prisoner's dilemma.
C)maximizes profit without regard to its competitors.
D)maximizes profit subject to its competitor's price.

Question

Quizplus · Accepted Answer

In a Cournot oligopoly, each firm assumes that its competitors' output levels remain constant, and it chooses its own output to maximize its profit based on this assumption. Therefore, each firm maximizes profit subject to its competitor's output.

In a Cournot Oligopoly, Each Firm