In the Scenario Above, in Nash Equilibrium

question 2

Multiple Choice

In the scenario above, in Nash equilibrium

• A) both firms cheat to produce more than the agreed amount.
• B) both firms comply with the agreement.
• C) one firm complies with the agreement while the other cheats to produce more than the agreed amount.
• D) both firms cheat to produce less than the agreed amount.

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Definitions:

Marginal Revenue

Income gained by selling an additional unit of a product or service.

Marginal Cost

The increased expenditure incurred from producing one more unit of a product or service.

Demand Curve

A visual diagram that illustrates how the quantity of a product demanded by buyers correlates with its price.

Marginal Revenue Curve

A graphical representation showing the additional income generated from the sale of one more unit of a good or service.