Why is a "Nash equilibrium" called an equilibrium?
A)The market is at maximum profits, with quantity demanded equal to supply.
B)No players can do better by changing his or her own choice alone, so the situation is relatively stable.
C)It overcomes market failure to provide the optimum social welfare outcome.
D)Costs are minimized, and profits are maximized.

Question

Quizplus · Accepted Answer

A Nash equilibrium is called an equilibrium because it is a situation where no player can do better by changing their own choice alone, as all players are already maximizing their own payoffs given the other players' choices. This leads to a relatively stable situation where no one has an incentive to deviate from their current strategy.

Why Is a "Nash Equilibrium" Called an Equilibrium