In the Cournot model, each firm assumes that its rival will ____ its output when the firm adjusts its own output. Which word best completes the sentence?
a. increase
b. not change
c. decrease
d. adjust
Question 2
In the price-leadership model,
a. firms believe that price increases result in a very elastic demand, while price decreases result in an inelastic demand for their product.
b. each firm acts as a price taker.
c. one dominant firm takes the reactions of all other firms into account in its output and pricing decisions.
d. firms coordinate their decisions to act as multiplant monopolies.
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