Assume that two firms in an oligopoly market are unable to collude. Once the Nash Equilibrium is reached
A)it is always possible for one firm to increase its profits by producing more output.
B)the two firms are jointly earning monopoly profit.
C)neither firm is able to improve its outcome on its own.
D)the outcome is equivalent to a competitive equilibrium.

Question

Assume that two firms in an olig​opoly market are unable to collude. Once the Nash Equilibrium is reached
A)​it is always possible for one firm to increase its profits by producing more output.
B)​the two firms are jointly earning monopoly profit.
C)​neither firm is able to improve its outcome on its own.
D)​the outcome is equivalent to a competitive equilibrium.

Quizplus · Accepted Answer

In an oligopoly market, the Nash Equilibrium occurs when each firm chooses the best strategy based on the assumption that the other firm will not change its strategy. In this case, neither firm can improve its outcome on its own because any deviation from the Nash Equilibrium strategy will result in lower profits for that firm. Therefore, the best choice is C - neither firm is able to improve its outcome on its own.

Assume That Two Firms in an Olig​opoly Market Are Unable

Assume That Two Firms in an Oligopoly Market Are Unable