When an oligopoly is in a Nash equilibrium, A. firms have colluded to set their prices. B. a firm will not take into account the strategies of its rivals. C. firms will not behave as profit maximizers. D. a firm will choose its best pricing strategy, given the strategies that it observes other firms have taken.

Question

Mathematics

Amani Mathis

11 February, 06:41

When an oligopoly is in a Nash equilibrium, A. firms have colluded to set their prices. B. a firm will not take into account the strategies of its rivals. C. firms will not behave as profit maximizers. D. a firm will choose its best pricing strategy, given the strategies that it observes other firms have taken.

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Answers (1)

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Rigoberto Vazquez · Answer 1

Option D is the answer.

Step-by-step explanation:

An oligopoly is a market in which there are only a few sellers, with each seller offering a product similar or identical to the others.

So, When an oligopoly is in a Nash equilibrium, then - a firm will choose its best pricing strategy, given the strategies that it observes other firms have taken.

Note:

A Nash equilibrium occurs when no participant (between different participants) can gain by a uniform change of strategy if the strategies of the others remain unchanged. The system is somewhat stable in this equilibrium state.