Question

Consider the two firms engaging in the Bertrand competition. On the demand side the market demand equation is p=200-Q. Consumers only buy from the firm charging the lower pric When charging the same price, they share the market equally. On the supply side, they have different marginal costs, with MC1=60 and MC2=50, and there is no fixed cost. Find the market price and the winner’s profit at the equilibrium.

	a.	At the equilibrium the market price is 60 and the winner firm 1’s profit is around 1500.
	b.	None of the other choices are correct.
	c.	At the equilibrium the market price is 50 and the winner firm 2’s profit is 0.
	d.	At the equilibrium the market price is 59.99 and the winner firm 2’s profit is around 1500.
	e.	At the equilibrium the market price is 59.99 and the winner firm 2’s profit is around 1400.

Answer 1