The Nash Equilibrium Is a Bertrand Game of Price Setting

question 11

Multiple Choice

The Nash equilibrium is a Bertrand game of price setting where all firms have different marginal cost is

• A)efficient because all mutually beneficial transactions will occur.
• B)efficient because of the free entry assumption.
• C)inefficient because some mutually beneficial transactions will be foregone.
• D)inefficient because of the uncertainties inherent in the game.

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Definitions:

Rate of Return

Net profit or net loss from an investment during a specified time span, presented as a percentage of the investment's initial financial input.

Monthly Payments

Regular payments made every month on a loan or mortgage over a set period, often including interest and principal.

Years

Units of time that represent the period it takes for the Earth to complete one orbit around the Sun, commonly used to measure durations or age.

Annuity

A financial product that pays out a fixed stream of payments to an individual, typically used as part of retirement planning to provide a steady income.