According to the Bertrand model, a firm will assume that rival firms will
A) keep their rates of production constant.
B) keep their prices constant.
C) match price cuts but not price increases.
D) match price increases but not price cuts.

Question

Quizplus · Accepted Answer

In the Bertrand model, firms assume that their rivals will keep their prices constant, leading to price competition until prices equal marginal cost.

According to the Bertrand Model, a Firm Will Assume That