In a Bertrand duopoly with product differentiation, explain how a change in one firm's marginal cost can have an effect on the price charged by the other firm
What will be an ideal response?
Each firm's price is a function of the other firm's price. If one incurs an increase in marginal cost, it raises its price. This, in turn, causes the other firm to raise its price.
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At the utility maximizing equilibrium for two goods, X and Y, which of the following must be TRUE?
A) The marginal utility per dollar spent on X will exceed the marginal utility per dollar spent on Y. B) The total expenditure will be the same for each good. C) The marginal utility per dollar from X equals the marginal utility per dollar from Y. D) The marginal utility will be the same for each good.
Compared with a monopolist, the demand curve faced by a monopolistically competitive firm is
A) more elastic. B) more inelastic. C) perfectly elastic. D) perfectly inelastic.