Under the Bertrand Model of Oligopoly

question 22

Multiple Choice

Under the Bertrand Model of oligopoly

• A) output will be greater than under monopoly but less than competitive output.
• B) output will be less than under monopoly but greater than competitive output.
• C) output will be equal to competitive output.
• D) output will be equal to monopoly output.

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Definitions:

Slope of the SML

The gradient of the Security Market Line which reflects the trade-off between risk and return in financial markets.

Standard Deviation

Standard deviation measures the amount of variation or dispersion of a set of values, indicating how much the values differ from the mean.

Risky Asset

An asset that has a significant degree of price volatility due to its sensitivity to market fluctuations.

Risk-free Asset

An investment with a certain rate of return, typically considered to be government bonds or similar vehicles with no risk of financial loss.