In game theory, a Nash equilibrium occurs when:
Correct answer: B. Each player's strategy is optimal given the others' strategies
- A. Every firm earns the same profit
- B. Each player's strategy is optimal given the others' strategies
- C. The government fixes the market price
- D. Total industry output reaches its maximum
Explanation
At a Nash equilibrium, no participant can improve its outcome by changing strategy alone while the other strategies remain unchanged. The condition does not require equal profits or maximum total output.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? [email protected]
About Microeconomics
Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
Practise Microeconomics
1,742 free Microeconomics MCQs from Economics, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Discussion
Stuck on an option, or know a faster way to get there? Ask or explain it here.
No comments yet. Be the first to explain this one.
Exams that ask Economics questions like this
Economics is on 3 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Microeconomics questions
A monopolist can successfully practise price discrimination only when it can:
In the short run, a competitive firm should temporarily shut down when the market price is below its:
A firm's economic profit is zero when its total revenue is equal to its:
A pure public good is characterized by:
If a binding price ceiling is set below the equilibrium price, the market is most likely to experience:
If the price of tea rises and the demand for coffee increases, tea and coffee are most likely: