An essential assumption of the Cournot model is that each firm ...

[evelyn o bentley]

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

[ky860224]

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]

TYSM

[Sarahjh]

Excellent