-Consider Figure 8.3, which depicts two firms producing a homogeneous product at the same constant marginal cost. According to the Bertrand model, the marginal cost of production for both firms is:

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In the Bertrand model, firms compete on price, and the equilibrium price tends to equal marginal cost when products are homogeneous and firms have the same constant marginal cost. Therefore, if the figure shows firms producing at the same constant marginal cost, and assuming PN represents the price in the Nash equilibrium of the Bertrand competition, the marginal cost of production for both firms would be PN.