So long as production in the oligopoly still occurs, recurring fixed costs have no impact on output under Cournot competition but do have an impact under Bertrand competition.
Answer the following statement true (T) or false (F)
True
Rationale: Under Cournot competition, firms produce where their residual MR intersects MC. Under Bertrand competition, firms will no longer sell at p=MC if there are recurring fixed costs.
You might also like to view...
Which of the following would shift the production function downward?
a. An improvement in technology b. A decrease in the interest rate c. An increase in number of workers d. An increase in the stock of human capital e. A decrease in the stock of physical capital
Suppose that the marginal revenue product of labor is currently 40 and the marginal revenue product of capital is 30. If both inputs have the same cost, the firm should:
A. increase labor and reduce capital to meet the cost minimization condition. B. increase both labor and capital proportionally to meet the cost minimization condition. C. increase capital and reduce labor to meet the cost minimization condition. D. decrease both labor and capital proportionally to meet the cost minimization condition.
In Figure 5.8, if the supply curve moves from S4 to S5,
A. the firm will make a smaller economic profit than they used to. B. the firm will go from making a loss to a bigger loss but one that is not big enough to make it want to shutdown. C. the firm will go from making an economic profit to a normal profit. D. the firm will go from making a loss to a bigger loss that is big enough to make it want to shutdown.
Part-time workers who desire full-time employment are
A. Not part of the labor force and do not contribute to the unemployment statistic. B. Underemployed and contribute to the unemployment statistic. C. Underemployed but do not contribute to the unemployment statistic. D. Discouraged workers and contribute to the unemployment statistic.