Which of the following is true of the Cournot duopoly model?
A)It shows how the interaction of uncoordinated output decisions of rival firms leads to equilibrium in the oligopoly market.
B)It explains how prices are determined in a market that has a large number of firms and a homogeneous product.
C)It shows how equilibrium is attained in a market where two firms collude to set output and price equal to the monopoly output and price.
D)It explains how prices are determined in a market with a single dominant firm and a large number of competitive fringe firms.

Question

Quizplus · Accepted Answer

The Cournot duopoly model is a game theory model that assumes two firms compete in a market by choosing the quantity of output they produce. The model shows how the interaction of uncoordinated output decisions of rival firms leads to equilibrium in the oligopoly market.

Which of the Following Is True of the Cournot Duopoly