Sue and Jane own two local gas stations.They have identical constant marginal costs, but earn zero economic profits.Sue and Jane constitute
A)a Sweezy oligopoly.
B)a Cournot oligopoly.
C)a Bertrand oligopoly.
D)none of the statements associated with this question are correct.

Question

Quizplus · Accepted Answer

Sue and Jane's situation is a Bertrand oligopoly because they have identical constant marginal costs and earn zero economic profit, which means they are competing on price rather than quantity. In a Bertrand oligopoly, firms compete by setting prices rather than quantities. This leads to intense price competition and forces prices down to the level of marginal cost.

Sue and Jane Own Two Local Gas Stations