An industry faces the demand curve Q = 200 - P, where each firm produces an identical good at a constant marginal cost of $8. What are the Bertrand equilibrium price and quantity?

Question

Quizplus · Accepted Answer

In Bertrand competition with identical goods and constant marginal cost, firms will set the price equal to marginal cost. Thus, P = $8. Substituting P = $8 into the demand curve Q = 200 - P gives Q = 192.

An Industry Faces the Demand Curve Q = 200 -