Two Firms Are in Bertrand Competition with Differentiated Goods

question 67

Multiple Choice

Two firms are in Bertrand competition with differentiated goods. Firm A faces the demand curve q_A = 40 - P_A + 0.50P_B.What is Firm A's total revenue?

• A) TR_A = 40P_A - + 0.50P_AP_B
• B) TR_A = (40 - P_A + 0.50P_A)P_B
• C) TR_A = (40 - P_A + 0.50P_A)q_A.
• D) TR_A = (40 - P_B + 0.50P_B)P_A

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Definitions:

Consumer Price Index

An indicator that calculates the weighted mean of the cost of a collection of consumer products and services, including transportation, food, and healthcare, employed to gauge inflation rates.

Inflation Rate

The enhancement of the overall price tag of goods and services in an economy throughout a specific period.

Consumer Price Index

A statistical estimate that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care, calculated by taking price changes for each item in the predetermined basket of goods and averaging them.

Inflation Rate

The percentage increase in the price level of goods and services in an economy over a period of time, indicating the rate at which purchasing power is eroding.