Questions
BU.450.750.K1.SP25 Quiz- Requires Respondus LockDown Browser
Single choice
Bertrand competition result is paradox because in the real world
Options
A.firms often set prices that are lower than marginal cost and make negative profits.
B.firms often set prices that are lower than marginal cost and make positive profits.
C.firms often set prices that are higher than marginal cost and make positive profits.
D.firms often set prices that are higher than marginal cost and make negative profits.
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Step-by-Step Analysis
The question asks us to connect the Bertrand competition result with what is observed in the real world, focusing on the paradox.
Option 1: 'firms often set prices that are lower than marginal cost and make negative profits.' This would imply firms routinely lose money, which is not the core paradox highlighted by Bertrand competition in real......Login to view full explanationLog in for full answers
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