A Cournot duopoly firm's labor demand curve
A) lies below that of a monopoly.
B) lies above that of a monopoly but below that of a competitive firm.
C) lies above that of a competitive firm.
D) is tangent to the labor demand curve of a monopoly.

Question

Quizplus · Accepted Answer

A Cournot duopoly firm's labor demand curve lies above that of a monopoly but below that of a competitive firm. This is because in a Cournot duopoly market, each firm can affect the market price with its own quantity choice, but the level of competition is not as intense as in a perfect competition market. Therefore, a Cournot duopoly firm's labor demand curve is higher than that of a monopoly since it has some market power to affect the price, but it is still lower than that of a competitive firm as it faces some competition from the other firm.

A Cournot Duopoly Firm's Labor Demand Curve