The Inverse Demand in a Cournot Duopoly Is P =

Multiple Choice

The inverse demand in a Cournot duopoly is P = a − b(Q₁ + Q₂) ,and costs are C₁(Q₁) = c₁Q₁ and C₂(Q₂) = c₂Q₂.The government has imposed a per-unit tax of $t on each unit sold by each firm.The equilibrium output of each firm is the same as a situation where each firm's:

A) demand increases by t.
B) demand decreases by t.
C) marginal cost increases by t.
D) marginal cost decreases by t.