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Questions › CUET-PG › CUET-PG 2024 › Q3
4 marks, −1Microeconomics › Monopolistic competition and oligopoly › Bertrand competitionHardabout 1 min

CUET-PG 2024 Question 3: Monopolistic competition and oligopoly

Assume firm i and firm j have constant marginal cost =c= c=c for an identical good in an oligopolistic market. They compete to set prices PiP_iPi​ and PjP_jPj​. They face a total market demand Q, where if Pi>PjP_i > P_jPi​>Pj​ the demand for firm i is 0. If Pi<PjP_i < P_jPi​<Pj​ the demand for firm i is Q. If Pi=PjP_i = P_jPi​=Pj​ they share the market equally and the demand for firm i is Q/2. In equilibrium, the prices of firms i and j are

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Assume firm i and firm j have constant marginal cost = c for an identical good in an oligopolistic market. They compete to set prices Pᵢ and Pⱼ. They face a total market demand Q, where if Pᵢ > Pⱼ the demand for firm i is 0. If Pᵢ < Pⱼ the demand for firm i is Q. If Pᵢ = Pⱼ they share the market equally and the demand for firm i is Q/2. In equilibrium, the prices of firms i and j are (A) Pᵢ > Pⱼ = c (B) Pᵢ > Pⱼ > c (C) Pᵢ < Pⱼ < c (D) Pᵢ = Pⱼ = c

Also written as: Assume firm i and firm j have constant marginal cost = c for an identical good in an oligopolistic market. They compete to set prices P_i and P_j. They face a total market demand Q, where if P_i > P_j the demand for firm i is 0. If P_i < P_j the demand for firm i is Q. If P_i = P_j they share the market equally and the demand for firm i is Q/2. In equilibrium, the prices of firms i and j are

Monopolistic competition and oligopoly has come up 104 times in 7 exams since 2004.

What this question tests

This question is on Bertrand competition, part of Monopolistic competition and oligopoly in Microeconomics.

Firms competing on price, and why identical firms price at marginal cost.

TestStop has 15 past-paper questions on this subtopic; the nearest in year are below.

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