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Questions › DSE › DSE 2005 › Q10
2 marks, −1Microeconomics › Monopolistic competition and oligopoly › Cournot competitionHardabout 3 min

DSE 2005 Question 10: Monopolistic competition and oligopoly

For the Cournot duopoly with p=a−b(q1+q2)p=a-b(q_1+q_2)p=a−b(q1​+q2​), C1(q1)=q1C_1(q_1)=q_1C1​(q1​)=q1​ and C2(q2)=2q2C_2(q_2)=2q_2C2​(q2​)=2q2​: if the market expands, as measured by an increase in the parameter aaa, then

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For the Cournot duopoly with p=a-b(q₁+q₂), C₁(q₁)=q₁ and C₂(q₂)=2q₂: if the market expands, as measured by an increase in the parameter a, then (A) The market share of the more efficient firm increases. (B) The market share of the more efficient firm decreases. (C) The market share of the more efficient firm is unchanged. (D) The market share of the more efficient firm may increase or decrease.

Also written as: For the Cournot duopoly with p=a-b(q_1+q_2), C_1(q_1)=q_1 and C_2(q_2)=2q_2: if the market expands, as measured by an increase in the parameter a, then

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

What this question tests

This question is on Cournot competition, part of Monopolistic competition and oligopoly in Microeconomics.

Firms choosing quantities simultaneously, reaction curves, and equilibrium as the number of firms or costs change.

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