An industry that can be described by the Cournot model will produce total output that is the same as that produced by a perfectly competitive industry, however they will charge a higher price.

Question

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In the Cournot model, firms choose quantities to maximize their profits given the quantities chosen by other firms, leading to a total output that is less than in a perfectly competitive market and prices that are higher than the competitive equilibrium price.

An Industry That Can Be Described by the Cournot Model