If firms compete in a Cournot fashion, then each firm views the:
A. output of rivals as given.
B. profits of rivals as given.
C. prices of rivals as given.
D. All of the statements associated with this question are correct.
Answer: A
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The 1930s were a period of
a. strong economic expansion and rapid growth of real output. b. high rates of inflation coupled with a low rate of unemployment. c. depressed economic conditions and prolonged high rates of unemployment. d. strong growth of real output even though the general level of prices was declining.
Which of the following is NOT part of Keynes's criticism of the classical theory of employment?
A. A reduction in wage rates will lead only to a reduction in total spending, not to an increase in employment. B. Investment spending is not very strongly influenced by the rate of interest. C. Prices and wages are simply not flexible downward in modern capitalistic economies. D. Saving in modern economies depends largely upon the level of disposable income and is little influenced by the rate of interest.