In an Identical-Product Bertrand Oligopoly, the Market Inverse Demand Curve

question 67

Multiple Choice

In an identical-product Bertrand oligopoly, the market inverse demand curve is P = 100 - 0.5Q. Firm A's average cost and marginal cost are constant at $20; Firm B's average cost and marginal cost are constant at $10. What is the equilibrium price in this market?

• A) $10
• B) $15
• C) $20
• D) $19.99

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Definitions:

Sales Discounts

Reductions in the price of goods or services offered by a seller to a buyer to encourage prompt payment.

Sales Returns

Refers to goods that are returned by the customer to the seller after the sale, often due to defects or dissatisfaction.

Operating Expenses

The costs associated with running a business's day-to-day operations, excluding the cost of goods sold.

Periodic Inventory System

An accounting method that records inventory purchase or sale transactions at the end of an accounting period.