Which of the Following Is True of the Bertrand Model

question 1

Multiple Choice

Which of the following is true of the Bertrand model of a duopoly?

• A) Each firm matches the price increases by the other firm.
• B) The firm that sets the lower price claims the entire market.
• C) The total output supplied by the firms determines the market price.
• D) Firms compete on multiple dimensions like quantity, price, and advertising.
• E) The demand curve facing an individual firm is kinked at the market price.

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Definitions:

Variable Overhead

Refers to the costs of production that fluctuate with the level of output, such as utilities and materials, that do not have a fixed price associated with production levels.

Direct Labor-hours

The total hours worked by employees directly involved in the production process, used as a basis for allocating costs to products.

Variable Manufacturing Overhead

Costs that vary with production output levels, such as utilities for the production facility, which are not directly tied to specific units of production.

Materials Price Variance

The difference between the actual cost of materials used in production and the expected (standard) cost of those materials.