Suppose That Etsy (An E-Commerce Site Focused on Handmade or Vintage

question 170

Multiple Choice

Suppose that Etsy (an e-commerce site focused on handmade or vintage items) necklace vendors compete in a Bertrand market structure with differentiated products. Demand for style 1, produced by vendor 1, is given by where p₁ is price of style 1 and p₂ is the price of style 2, produced by vendor 2. Demand for style 2 is
The costs of providing these necklaces are C₁ = q₁ and C₂ = 0.75q₂ respectively. The equilibrium price for style 1 is $____.

• A) 20.62
• B) 26.32
• C) 30.66
• D) 32.54

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