The Market Demand in a Bertrand Duopoly Is P =

question 99

Multiple Choice

The market demand in a Bertrand duopoly is P = 10 − 3Q,and the marginal costs are $1.Fixed costs are zero for both firms.Based on this information we can conclude that:

• A) P = $7 and firm 1 will sell 7 units of output.
• B) P = $1 and firms 1 and 2 will each sell 7 units of output.
• C) P = $1 and firms 1 and 2 will each sell 1.5 units of output.
• D) P = $1.5 and firms 1 and 2 will each sell 10 units of output.

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Definitions:

Fixed Cost

Describes expenses that do not change with the level of production or business activity, such as rent, salaries, and insurance premiums.

Variable Cost

Costs that change in proportion to the good or service that a business produces.

Total Cost

The complete cost of production, including both fixed and variable costs.

Average Variable Cost

The cost per unit of producing goods or services that changes with the level of output, including costs like labor and materials, divided by the quantity of output produced.