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Author Question: Because firms selling a homogeneous product set price in response to the (perceived) pricing ... (Read 36 times)

cmoore54

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on: Jul 1, 2018
Because firms selling a homogeneous product set price in response to the (perceived) pricing decision of other firms in the Bertrand Model of oligopoly in equilibrium price exceeds marginal cost.
 
  Indicate whether the statement is true or false

Question 2

The steeper the labor supply curve,
 
  A) the higher the wage the monopsonist pays.
  B) the lower the wage the monopsonist pays.
  C) the smaller the difference between the wage and the marginal expenditure on labor.
  D) the better off workers are.
Microeconomics ¦ Perloff ¦ 8th Edition
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Liamb2179

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

False. Because firms set price and sell a homogenous product other firms will always set price lower if a firm prices above marginal cost. In equilibrium all firms charge P = MC (same as the competitive equilibrium).

Answer to Question 2

B


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