In Which Oligopoly Model(s) Do Firms Earn Zero Profit

question 26

Multiple Choice

In which oligopoly model(s) do firms earn zero profit?

• A) Cournot
• B) Bertrand
• C) Stackelberg
• D) Oligopoly firms always earn positive economic profits.

---

Definitions:

Straddles

An investment strategy that involves purchasing both a call and put option on the same asset with the same strike price and expiration date, used to bet on volatility without predicting direction.

Asian Call Option

A type of call option where the payoff depends on the average price of the underlying asset over a specified period rather than at maturity.

Underlying Asset

The financial asset upon which derivative contracts, such as options and futures, are based.

Exercise Price

The price at which the holder of an option can buy or sell the underlying security or commodity.