Firm A and Firm B are duopolists.They are choosing the price for which they will sell their products and the quantity they will sell.Both firms make their decisions simultaneously.The ________ equilibrium in this situation occurs when Firm B chooses a pricing strategy given the strategy that Firm A chooses,and Firm A chooses a pricing strategy given the strategy that Firm B chooses.
A) duopoly
B) Nash
C) Von Neumman
D) Morgenstern
E) cartel

Question

Quizplus · Accepted Answer

This situation describes a Nash equilibrium, where each firm's decision is based on the assumption that the other firm will not change its strategy. In other words, Firm A chooses its strategy given the strategy that it expects Firm B to choose, and vice versa. The Nash equilibrium is reached when neither firm has an incentive to unilaterally deviate from its chosen strategy.

Firm a and Firm B Are Duopolists