Which of the Following Defines the Nash Equilibrium

question 60

Multiple Choice

Which of the following defines the Nash equilibrium?

• A) where the output chosen by each firm are consistent with each other
• B) the position resulting from everyone making their optimal decision based on their assumptions about their rivals' decisions
• C) where two or more firms (or people) by attempting independently to choose the best strategy for whatever the other(s) are likely to do, end up in a worse position than if they had co- operated in the first place.
• D) where neither firm is able to earn supernormal profits.

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Definitions:

Inventory

Goods or materials that a business holds for the purpose of resale or production.

Cash

Money in the form of coins or notes, as opposed to checks, credit, or other forms of payment.

Net Working Capital

Net working capital, a key indicator of short-term financial strength, is determined by subtracting a firm's current liabilities from its current assets, impacting its ability to meet short-term obligations.

Earnings Before Interest And Taxes

An indicator of a firm's earnings, specifically excluding the costs associated with interest and income taxes.