In the Cournot equilibrium, each firm assumes that the other's ______ is/are being held constant.
A) price
B) costs
C) output or sales
D) marketing strategy

Question

Quizplus · Accepted Answer

In Cournot equilibrium, each firm assumes that the other's output or sales are being held constant. This assumption helps each firm to determine its own optimal level of output, given the other firm's output. Both firms simultaneously choose their output levels based on this assumption, resulting in a stable Nash equilibrium.

In the Cournot Equilibrium, Each Firm Assumes That the Other's