The Bertrand Model of Price Setting Assumes That a Firm

question 60

Multiple Choice

The Bertrand model of price setting assumes that a firm chooses its price

• A) independently of what price other firms charge.
• B) subject to what price rival firms are charging.
• C) so that joint profits are maximized.
• D) without considering the shape of the demand curve.

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Definitions:

Cumulative

Refers to something increasing in quantity, degree, or force by successive additions, often used in the context of cumulative dividends or interest.

Non-cumulative

A term, often referring to preferred shares or dividends, indicating that if a dividend is not declared, it does not accumulate and is not owed in future periods.

Participating

In the context of financial securities, participating refers to the characteristic of a security that allows its holder to receive additional dividends or profits beyond a specified amount.

Non-cumulative Preferred Stock

A type of preferred stock where dividends are not accumulated if they are not declared.