In the Cournot equilibrium, the price that each firm accepts is:
A) slightly higher than a monopoly price.
B) the same as the monopoly price.
C) lower than a monopoly price, but higher than a competitive price.
D) the same as a competitive price.

Question

Quizplus · Accepted Answer

In a Cournot equilibrium, each firm chooses its output level while assuming that the other firm's output level is fixed. This results in a price that is lower than a monopoly price (where the firm would have a higher market power to set a higher price) but higher than a competitive price (where the firm would have no market power to set a higher price). Therefore, the correct answer is C) lower than a monopoly price, but higher than a competitive price.

In the Cournot Equilibrium, the Price That Each Firm Accepts