Question on: SS2 Economics - Price And Quantity Determination Under Duopoly
How does a duopoly affect the quantity of goods produced compared to a monopoly?
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A
Each firm produces more goods in a duopoly
B
Each firm produces less goods in a duopoly
C
There is no difference in the quantity of goods produced between a duopoly and a monopoly
D
It depends on the specific market conditions
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Correct Option: B
(Each firm produces less goods in a duopoly. Both firms need to consider the potential reactions of their competitor before setting their own strategy. This leads to a situation where both firms may end up producing less and charging a higher price than what they would have in a monopoly)
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