Suppose That a Particular Market Is Served by Two Firms

question 76

Multiple Choice

Suppose that a particular market is served by two firms. The market demand curve is given by p = 100 - y. Each firm incurs a constant cost per unit of $20. The Bertrand solution to this duopoly problem is:

• A)p ^* = p ^* = 70.
• B)p ^* = p ^* = 50.
• C)p ^* = p ^* = 20.
• D)p ^* = p ^* = 40. 1 2 1 2 1 2 1 2

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