Firm A has a higher marginal cost than firm B.They compete in a homogeneous product Bertrand duopoly.Which of the following results will NOT occur?

Question

Quizplus · Accepted Answer

In a Bertrand duopoly with homogeneous products, firms compete on price. The firm with the lower marginal cost (Firm B) can set a lower price than the firm with the higher marginal cost (Firm A) without incurring losses. Therefore, Firm B will set a price slightly below Firm A, capturing the market. As a result, the price set by Firm A will not be lower than the price set by Firm B, making option D incorrect.

Firm a Has a Higher Marginal Cost Than Firm B