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Author Question: In a Bertrand duopoly with product differentiation, explain how a change in one firm's marginal cost ... (Read 55 times)

fagboi

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on: Jul 1, 2018
In a Bertrand duopoly with product differentiation, explain how a change in one firm's marginal cost can have an effect on the price charged by the other firm.
 
  What will be an ideal response?

Question 2

If the supply of labor to a monopsonist is everywhere unit elastic, then the wage will equal
 
  A) the marginal expenditure.
  B) one-half of the marginal expenditure.
  C) the marginal revenue product of labor.
  D) one.
Microeconomics ¦ Perloff ¦ 8th Edition
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cassie_ragen

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Reply #1 on: Jul 1, 2018
Answer to Question 1

Each firm's price is a function of the other firm's price. If one incurs an increase in marginal cost, it raises its price. This, in turn, causes the other firm to raise its price.

Answer to Question 2

B


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