The Bertrand model is a more plausible model of firm behavior ...

[cdr_15]

The Bertrand model is a more plausible model of firm behavior than the Cournot model
 
  A) when firms set the quantity to be sold.
  B) when firms sell a differentiated product.
  C) because firms that sell a non-differentiated product typically act as price takers.
  D) because the Bertrand model predicts that firms will price at marginal cost.

Question 2

If a firm has market power in the output market but buys labor in a competitive market, it will hire the same quantity of labor that a competitive firm will.
 
  Indicate whether the statement is true or false

[Kaytorgator]

Answer to Question 1

B

Answer to Question 2

False. Since the firm has market power, it must lower price if it wishes to sell more. It will wish to sell fewer units than a competitive firm, and, therefore, hire less labor than a competitive firm does.