Because firms selling a homogeneous product set price in response to the (perceived) pricing decision of other firms in the Bertrand Model of oligopoly in equilibrium price exceeds marginal cost
Indicate whether the statement is true or false
False. Because firms set price and sell a homogenous product other firms will always set price lower if a firm prices above marginal cost. In equilibrium all firms charge P = MC (same as the competitive equilibrium).
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Suppose that a new study is released stating that consumption of orange juice (a substitute for apple juice) reduces the risk of cancer, and a major freeze destroys half of the country's apple cro
A) The price of apple juice might rise or fall and the quantity of apple juice falls. B) The quantity of apple juice might rise or fall, and the price of apple juice rises. C) The price of apple juice falls and the quantity of apple juice falls. D) The price of apple juice might rise or fall and the quantity of apple juice rises.
When an industry supply curve increases enough to erase economic profits,
a. weaker firms exit the industry b. quantity demanded decreases, but only slightly c. all firms in the industry incur economic losses d. entry of new firms and expansion of existing firms stop e. marginal revenue increases