Which of the following is true about a differentiated-product Bertrand duopoly?

A. Firm 1 and firm 2's prices will equal marginal cost.
B. Firm 1 and firm 2's prices will exceed marginal cost.
C. Firms in a differentiated-product Bertrand duopoly cannot earn positive economic profits in the long run.
D. Firm 1's price will always be above marginal cost, while firm 2's price will be equal to marginal cost.


Answer: B

Economics

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