Both firms in a Cournot duopoly would experience lower profits if:
A) there was an increase in marginal production costs.
B) each firm simultaneously increased output above the Nash equilibrium level.
C) one firm reduced output below the Cournot Nash equilibrium level, while the other firm continued to produce its Cournot Nash equilibrium output.
D) there was an increase in marginal production costs and one firm reduced output below the Cournot Nash equilibrium level, while the other firm continued to produce its Cournot Nash equilibrium output.

Question

Quizplus · Accepted Answer

The Answer of Both firms in a Cournot duopoly would experience lower profits if:
A) there was an increase in marginal production costs.
B) each firm simultaneously increased output above the Nash equilibrium level.
C) one firm reduced output below the Cournot Nash equilibrium level, while the other firm continued to produce its Cournot Nash equilibrium output.
D) there was an increase in marginal production costs and one firm reduced output below the Cournot Nash equilibrium level, while the other firm continued to produce its Cournot Nash equilibrium output.

Both Firms in a Cournot Duopoly Would Experience Lower Profits