In the Cournot model of oligopoly,:
A)each firm chooses simultaneously and non-cooperatively how much to produce to maximize its own profit.
B)each firm chooses simultaneously and non-cooperatively its own product's price to maximize its own profit.
C)one firm acts as a quantity leader, choosing its quantity first, while all other firms act as followers, choosing their quantities second and in reaction to the first.
D)each firm makes its profit-maximizing decision while considering the entire market demand, the same as a monopolist.

Question

Quizplus · Accepted Answer

In the Cournot model of oligopoly, each firm chooses simultaneously and non-cooperatively how much to produce to maximize its own profit. This is the defining feature of the Cournot model and distinguishes it from other models such as the Bertrand model, where firms compete on price. In the Cournot model of oligopoly, firms choose simultaneously and non-cooperatively how much to produce to maximize their own profit. This is different from a monopolist, who sets the quantity or price for the entire market. It is also different from a price-setting model of oligopoly, such as the Bertrand model, where firms choose their own prices simultaneously.

In the Cournot Model of Oligopoly