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Suppose Two Cournot Duopolist Firms Operate at Zero Marginal Cost

Question 46

Multiple Choice

Suppose two Cournot duopolist firms operate at zero marginal cost.The market demand is p = a - bQ.Firm 1's best-response function is


A) q1 = (a - bq2) /2b.
B) q1 = (a - 2bq2) /2b.
C) q1 = a/b.
D) q1 = a/2b.

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