In Bertrand Competition with Differentiated Products and Zero Marginal Costs

question 20

Multiple Choice

In Bertrand competition with differentiated products and zero marginal costs, Firm A faces the demand curve q_A = 80 - 2P_A + 0.50P_B. If Firm A expects Firm B to charge a price of $20, what price should Firm A charge?

• A) $14.25
• B) $18.00
• C) $22.50
• D) $24.75

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