Skip to content
We use only essential cookies to keep you signed in and remember your preferences. See our Cookie Policy.
TestStop
MocksPracticeResourcesIndiaBlogPricing
Sign in
Questions › DSE › DSE 2004 › Q9
2 marks, −1Microeconomics › Monopolistic competition and oligopoly › Cartels, collusion and the kinked demand curveModerateabout 2 min

DSE 2004 Question 9: Monopolistic competition and oligopoly

For the Cournot duopoly with p=1−q1−q2p=1-q_1-q_2p=1−q1​−q2​, C1(q1)=cq1C_1(q_1)=cq_1C1​(q1​)=cq1​ and C2(q2)=q2/2C_2(q_2)=q_2/2C2​(q2​)=q2​/2: is the derived Cournot outcome Pareto efficient from the point-of-view of the two firms?

Tap an option to check your answer.

Answer and worked solution

Checking your account…

Plain-text version

For the Cournot duopoly with p=1-q₁-q₂, C₁(q₁)=cq₁ and C₂(q₂)=q₂/2: is the derived Cournot outcome Pareto efficient from the point-of-view of the two firms? (A) Yes (B) No (C) This is undecidable in the Arrow-Debreu model (D) Cannot be determined if prices are sticky

Also written as: For the Cournot duopoly with p=1-q_1-q_2, C_1(q_1)=cq_1 and C_2(q_2)=q_2/2: is the derived Cournot outcome Pareto efficient from the point-of-view of the two firms?

Monopolistic competition and oligopoly has come up 104 times in 7 exams since 2004.

What this question tests

This question is on Cartels, collusion and the kinked demand curve, part of Monopolistic competition and oligopoly in Microeconomics.

How firms coordinate to raise profit and why prices in oligopoly can be rigid.

TestStop has 13 past-paper questions on this subtopic.

Practise Monopolistic competition and oligopolyMore on Cartels, collusion and the kinked demand curve

Similar questions from other papers

  • CUET-PG 2026 · Q8The following two characteristics define a particular type of market: A. Close substitute products are sold by firms; B. Free entry and exit of firms. Select the…
  • GATE 2026 · Q45Two companies, Company 1 and Company 2, are playing a simultaneous-move game. They are selling competing devices, whose quantity demanded are given by x₁ and x₂, and…
  • IIT JAM 2026 · Q56A duopoly market has demand P=120-0.6Q with Q=Q₁+Q₂, and cost functions C₁=6Q₁ and C₂=0.5Q₂², where P is unit price, Cᵢ is the cost function and Qᵢ is the output of…
  • UGC-NET 2026 · Q2Which of the following is not an assumption of Monopolistic Competition?
  • CUET-PG 2025 · Q59The Kinked demand curve model can explain (A) the level at which price will be set by firms to maximize profits. (B) the level of price at which the kink will occur as…

Question from the DSE 2004 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.