Lecture 4

Question 1

define oligopoly

Answer 1

a state of limited competition, in which a market is shared by a small number of firms

Question 2

define the Cournot equilibrium

Answer 2

a set of quantities sold by firms such that, holding the quantities of all other firms constant, no firm can obtain a higher profit by choosing a different quantity

Question 3

define the residual demand curve

Answer 3

The market demand that is not met by other sellers at any given price

Question 4

what is the assumption for the Cournot Duopoly

Answer 4

(1) there are two firms and no other firms can enter the market,
(2) the firms have identical costs,
(3) they sell identical products, and
(4) the firms set their quantities simultaneously.