Which of the following is true?
A) In Bertrand oligopoly each firm believes that its rivals will hold their output constant if it changes its output.
B) In Cournot oligopoly firms produce an identical product at a constant marginal cost and engage in price competition.
C) In oligopoly a change in marginal cost never has an effect on output or price.
D) None of the answers is correct.

Question

Quizplus · Accepted Answer

In a Bertrand oligopoly, firms compete by setting prices, not output. In a Cournot oligopoly, firms compete by setting quantities, not prices. Changes in marginal cost can affect output and price in an oligopoly.

Which of the Following Is True