In the Cournot model with firms A and B, if marginal cost of firm A increases, a) The output of firm A increases b) The total output gets closer to the output level of monopoly c) Market price decreases d) Market share of firm A increases

The correct answer is b.

When the marginal cost of firm A increases, it means that the firm has increased variation in the total cost after increasing the quantity generated by one unit. When the firms are two in the Cournot model, it means that it will work to their advantage if they collaborate because the firms can position their pricing and individual output at extents that will increase their combined profits. This implies that there will be decreased competition between the two firms. Therefore, the total output will be almost similar to a monopoly output.