Explain how two Bertrand price competitors can price above marginal cost in an infinitely repeated game setting.
What will be an ideal response?
Let p be any price greater than MC. Then consider the trigger strategy "set p if p has always been set by both firms in previous stages, MC otherwise." Then if firms do not discount the future heavily, the firms are best-responding to each other by playing such a strategy -- making any price above MC a potential equilibrium price.
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A system of universal medical insurance would tend to ________ the ________ for medical services
A) increase; elasticity of demand B) decrease; elasticity of demand C) decrease; quantity demanded D) decrease; non-monetary payments
The relative price of a good is
A) an opportunity cost. B) equal to the money price of a good. C) equal to the price of that good divided by the quantity demanded of the good. D) what you get paid for babysitting your cousin.