Which of the following statements best describes a Cournot equilibrium in the context of oligopoly markets?
1
Firms compete on the basis of product price instead of quantity produced.
2
Each firm assumes the output of its rivals as given and chooses its quantity to maximize profit, leading to a stable equilibrium.
3
It is achieved when all firms in the market collude to maximize joint profits.
4
Firms in the market are price takers, making their decisions based on the market price.
5
A single firm sets the market price, and other firms follow as price takers.