A Nash Equilibrium in the Duopoly Game

question 146

Multiple Choice

A Nash equilibrium in the duopoly game

• A) means that one player has greater market power.
• B) occurs when each player takes the best possible action regardless of the strategy chosen by other firms.
• C) will always lead to equilibrium in which the firms' total profit is the largest.
• D) can occur only if firms cooperate with each other.
• E) means that a firm must be able to determine its actions and the actions of its competitor.

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Definitions:

Freedom of Enterprise

the ability of individuals to start and manage their own businesses without undue restriction or interference.

Entrepreneurs

Individuals who start, organize, manage, and assume the risk for a business or enterprise, often introducing new products or services to the market.

Economic Resources

Assets or materials that can be used in the production of goods and services, including labor, capital, and natural resources.

Legal Restraint

A control imposed by law, such as regulations restricting certain behaviors or practices.