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Author Question: An essential assumption of the Cournot model is that each firm aims to maximize profits, based on ... (Read 63 times)

evelyn o bentley

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on: Jun 29, 2018
An essential assumption of the Cournot model is that each firm aims to maximize profits, based on the expectation that its own output decision will not have an effect on the decisions of its rivals. Critically evaluate this assumption.
 
  What will be an ideal response?

Question 2

Refer to Table 1-6. What is Ivan's marginal cost if he decides to stay open for six hours instead of five hours?
 
  A) 10 B) 20 C) 25 D) 91.67


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ky860224

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Reply #1 on: Jun 29, 2018
Answer to Question 1

The assumption is a problem on two fronts. First, no firm can reasonably be expected to know what the amount of output that a rival firm is going to produce in advance without some kind of collusion. Second the assumption that the firm's own output will not have an effect on the decision of its rivals appears nave.

Answer to Question 2

C


evelyn o bentley

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Reply 2 on: Jun 29, 2018
Thanks for the timely response, appreciate it

patma1981

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Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

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