The Nash Equilibrium in a Bertrand Game in Which Firms

question 6

Multiple Choice

The Nash equilibrium in a Bertrand game in which firms produce perfect substitutes and have equal marginal costs is:

• A)efficient because all mutually beneficial transactions will occur.
• B)efficient because of the free entry assumption.
• C)inefficient because some mutually beneficial transactions will be foregone.
• D)inefficient because of the uncertainties inherent in the game.

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Definitions:

Public Investors

Individuals or entities that invest their money in publicly traded securities, such as stocks and bonds, available on the open market.

Stock

Shares representing ownership in a company, which can be bought and sold in financial markets.

Professional Angels

Informal investors, often experienced entrepreneurs or executives, who provide capital for start-up businesses in exchange for ownership equity or convertible debt.

Doctors

Medical professionals who diagnose and treat illnesses, perform medical procedures, and advise patients on maintaining good health.