Which of the following is NOT true about a differentiated-product Bertrand duopoly?
A) Firm 1 and firm 2's prices will be equal to marginal cost.
B) Firm 1's price will always be above marginal cost, while firm 2's price will be less than marginal cost.
C) Firm 1's price will always be less than marginal cost, while firm 2's price will be above marginal cost.
D) None of the preceding answers is correct.

Question

Quizplus · Accepted Answer

In a differentiated-product Bertrand duopoly, firms compete on price with differentiated products, leading to prices that can be above marginal cost due to product differentiation and market power. None of the statements A, B, or C accurately describe the pricing outcome in such a market structure, making D the correct choice.

Which of the Following Is NOT True About a Differentiated-Product