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 makes its production decision accordingly. The firms do not collude or coordinate their production decisions. This results in a non-cooperative equilibrium where firms choose quantities that are interdependent but not coordinated. Prices are determined by the market demand and the total quantity supplied by all firms.

In the Cournot Model