Consider three firms producing the same good in a market competing a la Bertrand. They face an inverse demand function Q(p) = 10 – P Which of the following is FALSE? For these problems assume no firm has a fixed cost. A If each firm's marginal cost is $5, the equilibrium price paid by consumers is 5. B If a firm leaves the market and their marginal cost is higher than the Nash Equilibrium Price, the Nash Equilibrium will not change.
Consider three firms producing the same good in a market competing a la Bertrand. They face an inverse demand function Q(p) = 10 – P Which of the following is FALSE? For these problems assume no firm has a fixed cost. A If each firm's marginal cost is $5, the equilibrium price paid by consumers is 5. B If a firm leaves the market and their marginal cost is higher than the Nash Equilibrium Price, the Nash Equilibrium will not change.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![Consider three firms producing the same good in a market competing a la Bertrand. They face an
inverse demand function
Q(p) = 10 – P
Which of the following is FALSE? For these problems assume no firm has a fixed cost.
A If each firm's marginal cost is $5, the equilibrium price paid by consumers is 5.
B If a firm leaves the market and their marginal cost is higher than the Nash Equilibrium Price,
the Nash Equilibrium will not change.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1f9fa382-edf4-4aa2-a18c-617136787908%2F15b3a862-ec1b-41a6-b606-548d643f8bdf%2Foqhk67_processed.png&w=3840&q=75)
Transcribed Image Text:Consider three firms producing the same good in a market competing a la Bertrand. They face an
inverse demand function
Q(p) = 10 – P
Which of the following is FALSE? For these problems assume no firm has a fixed cost.
A If each firm's marginal cost is $5, the equilibrium price paid by consumers is 5.
B If a firm leaves the market and their marginal cost is higher than the Nash Equilibrium Price,
the Nash Equilibrium will not change.
![C The Nash Equilibrium will always be equal to some firm's marginal cost.
D If each firm's marginal cost is $5, the equilibrium quantity consumed is $5.
E If two firms have a marginal cost of 3, and a firm has a Marginal Cost of 3.5, there are multiple
Nash Equilibria.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1f9fa382-edf4-4aa2-a18c-617136787908%2F15b3a862-ec1b-41a6-b606-548d643f8bdf%2Fowrmhow_processed.png&w=3840&q=75)
Transcribed Image Text:C The Nash Equilibrium will always be equal to some firm's marginal cost.
D If each firm's marginal cost is $5, the equilibrium quantity consumed is $5.
E If two firms have a marginal cost of 3, and a firm has a Marginal Cost of 3.5, there are multiple
Nash Equilibria.
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