In _____,one firm uses its knowledge of the other firms' reaction functions to enhance its own profits.
A)the Cournot duopoly
B)a monopolistically competitive market
C)a perfectly competitive market
D)the Stackelberg model

Question

Quizplus · Accepted Answer

The question is describing the Stackelberg model, where one firm acts as the market leader and takes into account the reaction function of the other firms to maximize its own profits. This is not the case in a perfectly competitive market or a monopolistically competitive market, and while the Cournot duopoly involves strategic interaction between firms, it does not involve knowledge of reaction functions to enhance profits.

In _____,One Firm Uses Its Knowledge of the Other Firms