Duopolist firms 1 and 2 sell a homogeneous good with demand , where is quantity demanded at price . Firms 1 and 2 have constant marginal costs of and respectively. The firms simultaneously announce prices and consumers buy from the firm with the lower price; if prices are equal, all consumers buy from firm 1. Firm 1's equilibrium price is
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Duopolist firms 1 and 2 sell a homogeneous good with demand Q = 100 - 2P, where Q is quantity demanded at price P. Firms 1 and 2 have constant marginal costs of 0 and 30 respectively. The firms simultaneously announce prices and consumers buy from the firm with the lower price; if prices are equal, all consumers buy from firm 1. Firm 1's equilibrium price is (A) 30 (B) 0 (C) 25 (D) 20
Monopolistic competition and oligopoly has come up 104 times in 7 exams since 2004.
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.
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Question from the DSE 2018 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.