Refer to Scenario 12.2. What will be the price of this new drink in the long run if the industry is a Bertrand duopoly?

A) $3
B) $9
C) $12
D) $13.50
E) none of the above

Question

Refer to Scenario 12.2. What will be the price of this new drink in the long run if the industry is a Bertrand duopoly?A)  $3B)  $9C)  $12D)  $13.50E)  none of the above

Jeanine Johnson · Accepted Answer

Final Answer : A, Explanation :  In a Bertrand duopoly, firms compete on price, and the outcome tends to drive the price down to the level of marginal cost if the products are homogeneous. Since the marginal cost is $3, the price in the long run would be $3.

Refer to Scenario 12.2. What will be the price of this new drink in the long run if the industry is a Bertrand duopoly?

A) $3
B) $9
C) $12
D) $13.50
E) none of the above

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