Bertrand duopolists, Firm 1 and Firm 2, face inverse market demand $P = 50 - Q$ . Both have marginal cost, $M C = \$ 20$ . The equilibrium price in the market will be
A) $10
B) $20
C) $30
D) $40

Question

Quizplus · Accepted Answer

In a Bertrand duopoly with identical products and constant marginal costs, firms will set prices equal to marginal cost in equilibrium. Therefore, the equilibrium price will be $20.

Bertrand Duopolists, Firm 1 and Firm 2, Face Inverse Market P=50−QP = 50 - QP=50−Q

Bertrand Duopolists, Firm 1 and Firm 2, Face Inverse Market $P = 50 - Q$