As a practical matter, which of the following predictions of the Bertrand model appear to be unrealistic:

Question

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The Bertrand model, which focuses on price competition among firms, makes several assumptions that can be unrealistic in practice. It suggests that firms will price at marginal cost, leading to zero economic profits, especially as the number of firms increases. However, in real-world imperfectly-competitive markets, firms often have some degree of market power allowing them to set prices above marginal cost and earn positive economic profits. Additionally, the model's assumption that prices fall with the entry of more firms does not always hold due to factors like product differentiation and collusion.

As a Practical Matter, Which of the Following Predictions of the Bertrand