1)A Cournot equilibrium output would increase as the number of firms in the market decreases. True or false?

2)In oligopolistic competition, firms always produce differentiated products. True or false?

1)True

The above statement is true. The Cournot model is applicable in an oligopoly market structure. When the firms in the market supply similar products or homogenous commodities they face competition from each other. To balance sales in the market these firms decide the quantity that will supply in the market. If the number of firms in the market reduces the remaining firm firms will get to supply a higher quantity.

2)False

The statement 'In oligopolistic competition, firms always produce differentiated products' is false. The reason firms in the oligopolistic market not always produce differentiated products. Firms in the oligopolistic market sell both differentiated and homogeneous products.