The market demand in a Bertrand duopoly is P = 10 ? 3Q, and the marginal costs are $1. Fixed costs are zero for both firms. Which of the following statement(s) is/are true?
A. Profits of firm 1 = profits of firm 2.
B. Producer's surplus of firm 1 = producer's surplus of firm 2.
C. P = $1.
D. All of the statements associated with this question are correct.
Answer: D
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In a monopolistically competitive industry, the firms are currently making an economic profit. When this market moves to its long-run equilibrium, the firms' demand curves will have ________ and their economic profit will have ________
A) shifted leftward; decreased to zero B) shifted leftward; decreased but remain greater than zero C) shifted rightward; decreased to zero D) remained the same; decreased to zero
Refer to Figure 3-4. At a price of $20, how many units will be sold?
A) 400 B) 500 C) 600 D) 800
Demand is inelastic if
a. the percentage change in price is greater than the percentage change in quantity demanded b. the percentage change in price is less than the percentage change in quantity demanded c. the percentage change in price is equal to the percentage change in quantity demanded d. the value of price elasticity is equal to -1 e. the value of price elasticity is less than -1 (e.g., -3)
Which of the following is a characteristic of a competitive market?
a. There are many buyers but few sellers. b. Firms sell differentiated products. c. There are many barriers to entry. d. Buyers and sellers are price takers.