Suppose the Market Demand Curve for a Bertrand Duopoly Is

question 40

Multiple Choice

Suppose the market demand curve for a Bertrand duopoly is downward sloping. What happens to the Nash equilibrium price and market quantity if the constant marginal cost declines?

• A) Price and quantity decline.
• B) Price increases and quantity declines.
• C) Price decreases and quantity increases.
• D) Price and quantity increase.

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Definitions:

Bondholder

An investor who owns bonds issued by corporations or governments, thereby lending money to the issuer in return for periodic interest payments and the return of principal at maturity.

Annual Coupon Rate

The interest rate a bond pays its holder, expressed as a percentage of its face value and payable annually.

Bond

A fixed-income instrument that represents a loan made by an investor to a borrower, typically corporate or governmental, which includes terms regarding the interest rate and when the loaned funds (bond principal) must be paid back (maturity).

Effective EAR

The Effective Annual Rate is the actual return on an investment, taking into account the effect of compounding interest.