Which one of the following statements is not applicable to the Bertrand model?
A) Firms are likely to engage in price- cutting behaviour.
B) Firms make only a small amount of supernormal profit when the market is in equilibrium.
C) Firms choose price simultaneously.
D) In practice, firms have an incentive to collude.
E) Nash equilibrium (in the absence of collusion) is where price is equal to average cost.
Correct Answer:
Verified
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A)
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