Consider Two Firms Engaged in Bertrand Competition with Differentiated Goods

question 89

Multiple Choice

Consider two firms engaged in Bertrand competition with differentiated goods and zero marginal costs.
Firm A's demand curve is q_A = 60 - 0.50P_A + 0.40P_B.
Firm B's demand curve is q_B = 72 - 0.50P_B + 0.40P_A.
In a Nash equilibrium, approximately how much profit does Firm A earn?

• A) $4,800
• B) $3,210
• C) $6,040
• D) $5,588

Understand how interest compounding frequency affects the future value of investments.

Understand and apply the concept of present value to determine the current worth of future cash flows.

Calculate average rates of return on investments over different periods.

Apply interest rate formulas to calculate future values of investments and savings.

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