Which of the Following Statements Is the Best Description of a Nash

question 26

Multiple Choice

Which of the following statements is the best description of a Nash equilibrium?

• A)An equilibrium outcome achieved by cooperation between players in the game.
• B)An outcome where each player's best strategy is to maintain its present behaviour given the present behaviour of the other players.
• C)An outcome that is achieved when players in the game have jointly maximized profits and divided those profits according to market share of each player.
• D)An outcome where each player's strategy depends on the behaviour of its opponents.
• E)An equilibrium outcome that is achieved by collusion,and no party has an incentive to change their behaviour.

---

Definitions:

Minimum Efficient Scale

The smallest amount of production a company can achieve while still taking full advantage of economies of scale with regards to minimizing its costs.

Long-Run ATC

The average total cost of production when all inputs, including capital, are variable and the scale of production can change.

Diseconomies of Scale

The phenomenon where operational costs per unit increase as the output increases, often due to inefficiencies or management challenges.

Natural Monopoly

A market structure where a single supplier is most efficient in producing or providing goods or services due to high fixed or startup costs, making competition less viable.