The Cournot reaction function

Question

BlackTom AI · Accepted Answer

The question concerns the Cournot reaction function, so we need to assess what each option says about this concept.
Option 1: 'maps out the best response a firm could take for each possible action of the rival firm.' This is an accurate description of the Cournot reaction function. It shows, for a given output choice by one firm, what the optimal output for the other firm would be, thus mapping best responses across possible rival actions. 
Option 2: 'maps out how firms work together to maximize profits.' This describes collusion or cooperative behavior, not the Cournot framework where firms act independently, given beliefs about rivals' output. Therefore it is incorrect as a characterization of the reaction function. 
Option 3: 'is most applicable to monopoly markets.' Cournot analysis is central to oligopoly settings with a few firms, where each firm reacts to the others' outputs. It is not specifically tailored to monopolies, where a single firm faces the market. Thus this statement is misleading. 
Option 4: 'shows how each firm makes its profit-maximizing decision while considering the entire market demand, the same as a monopolist.' While Cournot firms consider market demand, they do so in response to rivals’ outputs rather than treating demand as if they alone faced the entire market. The monopolist faces the entire market demand unopposed, which is a different setup from Cournot competition. Hence this description conflates Cournot with monopoly pricing.

ECON_104B_001_25S Chapter 13 Practice Problems -- Multiple-Choice

The Cournot reaction function

查看解析

登录即可查看完整答案

类似问题

Consider a competition of quantities between two producers, such that the marginal cost of producer 1 is equal to 10$ and the marginal cost of producer 2 is equal to 40$. If the aggregated demand is equal to: QD(P)=40-0.25P{"version":"1.1","math":"QD(P)=40-0.25P"}, what is the welfare inequilibrium?

Below is the reaction function diagram for an oligopoly. There are two firms each has the marginal cost of 4 and the demand function is P=20-2Q.What combined output do the firms need to produce for industry profits to be zero?

Below is the reaction function diagram for an oligopoly. There are two firms each has the marginal cost of 4 and the demand function is P=20-2Q.To two decimal places what is one firm's profit at the Cournot equilibrium?

Imagine a Cournot game with two firms (A and B). The demand curve in this market is P=280-Qa-Qb. Each firm has marginal cost equal to $40. What is the equilibrium market price?

A Cournot oligopoly has 19 firms, and inverse market demand P = 60 - Q. All firms have marginal cost, . The equilibrium output for each firm will be

In a Cournot competition setting

更多留学生实用工具

考试浏览器助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单