Which statement most nearly describes a Nash equilibrium applied to price competition?
A) Two firms cooperate and set the price that maximizes joint profits.
B) Each firm automatically moves to the purely competitive equilibrium because it knows the other firm will eventually move to that price anyway.
C) Given the prices chosen by its competitors, no firm has an incentive to change their prices from the equilibrium level.
D) One dominant firm sets the price, and the other firms take that price as if it were given by the market.
C
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A market in which competition and entry are restricted by the granting of a public franchise, government license, patent, or copyright is called a
A) legal monopoly. B) natural monopoly. C) single-price monopoly. D) price-discriminating monopoly.
Kurt decided to increase the number of stocks in his portfolio. In doing so, Kurt reduced
a. both the firm-specific risk and the market risk of his portfolio. b. the firm-specific risk, but not the market risk of his portfolio. c. the market risk, but not the firm-specific risk of his portfolio. d. neither the market risk nor the firm-specific risk of his portfolio.