Which alteration of the assumptions behind the Bertrand model can help avoid the Bertrand Paradox (that an outcome resembling perfect competition may arise with even as few as two firms)?
a. assume firms have limited capacities.
b. assume firms produce differentiated rather than homogeneous products.
c. assume firms play repeatedly and thus may collude.
d. all of the above.
d
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Rolnick and Weber point out that a bimetallic standard will not exhibit Gresham's Law if:
a. people are willing to use coins at their market values. b. people are willing to use coins at their face values. c. the government regulates the quantity of each type of coin in circulation. d. paper money circulates along with minted coins.
If the marginal product of labor is 100 and the price of labor is 10, while the marginal product of capital is 200 and the price of capital is $30, then what should the firm?
a. The firm should use relatively more capital b. The firm should use relatively more labor c. The firm should not make any changes – they are currently efficient d. Using the Equimarginal Criterion, we can't determine the firm's efficiency level e. Both c and d