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Eduncle posted an MCQ
October 20, 2019 • 14:56 pm 0 points
  • UGC NET
  • Economics

In the context of oligopoly, consider the following statements :

In the context of oligopoly, consider the following statements : (a) Cournot's equilibrium is a Nash equilibrium. (b) Stackelberg equilibrium is a Nash equilibrium. Select the correct answer from the code given below :

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    Eduncle Best Answer

    In cournot equilibrium model each seller assumed that others output is unaffected by his own decision they would adjust price and output until a position of equilibrium was reached. In cournot duopoly, stable equilibrium is reached when each produces is producing 1/3rd of total demand.
    In stackelberg equilibrium model here there is a leader and follower. Here leaders 1st choose his quantity production level and based on that follower will decide to choose his output. The output attain by both leader and follower is equilibrium.

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