In a Cournot duopoly, a residual demand curve: a

Marketing Jan 11, 2021

In a Cournot duopoly, a residual demand curve:

a. is the same as a marginal revenue curve when determining output in the Cournot model,

b. is the same as a market demand curve,

c. is steeper than the market demand curve,

d. represents the demand curve that one firm faces given the output choice of the other firm.

Expert Solution

The correct answer is option d. represents the demand curve that one firm faces given the output choice of the other firm. In a Cournot duopoly, also known as Cournot competition, the residual demand curve is the graphic representation of the demand of an individual firm as a function of the supply of the other competing firm. That is to say, this curve represents the demand that is left over for a company given what the other competing firm supplies.

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