Multiple Choice
As a practical matter, which of the following predictions of the Bertrand model appear to be unrealistic:
A) Firms in imperfectly-competitive markets tend to charge prices that are greater than marginal cost.
B) As the number of firms enter the industry prices to fall.
C) Firms in imperfectly-competitive markets earn zero economic profits.
D) All of the above are unrealistic.
E) None of the above are unrealistic.
Correct Answer:
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