Author Question: In the Cournot duopoly model, each firm assumes that A) rivals will match price cuts but will not ... (Read 85 times)

anshika · **on:** Jul 1, 2018

In the Cournot duopoly model, each firm assumes that

A) rivals will match price cuts but will not match price increases.
B) rivals will match all reasonable price changes.
C) the price of its rival is fixed.
D) the output level of its rival is fixed.

Question 2

Suppose capital and labor are perfect substitutes in a long-run production process. If labor costs 15 per hour and the rental rate of capital is 20 per hour, what can we say about the profit maximizing choice of labor and capital inputs?

A) We will only use labor in the production process
B) We will only use capital in the production process
C) We will use equal amounts of capital and labor
D) The optimal capital-labor ratio is 0.75-to-1.