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From the point of view of the manager, Bertrand oligopoly is _______ since it leads to ________ profits.
a. undesirable; negative.
b. optimal; positive.
c. undesirable; zero.
d. optimal; zero.

Sagot :

c. undesirable; zero

Here's why:

  • Bertrand oligopoly is a market structure with a few firms selling identical products and competing solely on price.
  • This intense price competition often leads to price wars, where firms keep dropping prices to undercut each other.
  • In the end, firms may be forced to sell their products at a price very close to their marginal cost, which minimizes profits or even leads to losses.

Therefore, from a manager's standpoint, a Bertrand oligopoly is undesirable because it can result in zero or negative profits.

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