Which of the following is true?
A)In Bertrand oligopoly markets each firm believes that their rivals will hold their output constant if it changes its output.
B)In Cournot oligopoly market firms produce an identical product at a constant marginal cost and engage in price competition.
C)In Sweezy oligopoly markets each firm believes rivals will cut their prices in response to a price reduction, but will not raise prices in response to price increases.
D)In oligopoly market a change in marginal cost never has an affect on output or price.

Question

Quizplus · Accepted Answer

In Sweezy oligopoly markets, the firms believe that their rivals will follow their price reductions but not price increases, leading to a kinked demand curve. In Bertrand oligopoly markets, firms compete on price, while in Cournot oligopoly markets, firms compete on quantity produced. Option D is incorrect because changes in marginal cost can affect output and price in oligopoly markets.

Which of the Following Is True