In the Cournot model
A)Each firm takes the quantities produced by its rivals as given
B)Each firm takes the prices charged by its rivals as given
C)One firm plays a leadership role and its rivals merely follow
D)Prices are higher and quantities are slightly less than we would see if the firms colluded

Question

Quizplus · Accepted Answer

In the Cournot model, each firm takes the quantities produced by its rivals as given and decides how much to produce based on that information. The firms do not coordinate or collude, and each one tries to maximize its own profit given the output decisions of the other firms. This results in a Nash equilibrium where the quantities produced are lower than if the firms had colluded, but the prices are higher.

In the Cournot Model