Which of the following is true as the firms move from the original to the new Nash-Cournot equilibrium?

Suppose two identical firms (Firm A and Firm B) are competing in a Nash-Cournot oligopoly. Now suppo Show more Suppose two identical firms (Firm A and Firm B) are competing in a Nash-Cournot oligopoly. Now suppose that one of the firms Firm A develops a strategy and practice that allows it to produce at a lower marginal cost than the other firm. That is Firm A has a cost advantage over Firm B. Which of the following is true as the firms move from the original to the new Nash-Cournot equilibrium? A. A new firm Firm C will in all likelihood since the market is no longer stable and profits are high. B. Firm A will expand its output. C. Firm A will contract lessen its output to preserve its original profit amount. D. Firm B will expand its output to make up for its cost disadvantage. Show less

QUICK QUOTE

Approximately 250 words