question archive Sue and Jane each own a local petrol station
Sue and Jane each own a local petrol station
Subject:MarketingPrice:2.88 Bought3
Sue and Jane each own a local petrol station. They have identical constant marginal costs but earn zero economic profits. Sue and Jane constitute:
a) a Sweezy oligopoly.
b) a Cournot oligopoly.
c) a Bertrand oligopoly.
d) None of the above.
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- The correct answer is: c) a Bertrand oligopoly.
Sue and Jane are duopolies. They sell identical products and have similar constant marginal costs. Since they earn zero economic profit, they compete on price mechanisms. This model of oligopoly in which the firms compete on price is called the Bertrand model.
