If neither firm has a dominant strategy, a Nash equilibrium cannot exist
Indicate whether the statement is true or false
False. Even if a firm has no strategy that dominates all others, it may still have a strategy that is the best given what the other firm is doing. When this is true for both firms for the same strategy pair, a Nash equilibrium exists.
You might also like to view...
Lolita wants to purchase a rather bland-looking shopping center built in the 1970s, tear it down, and construct an architecturally-stimulating office building that will confer $750,000 of benefits to society. In its current state, the shopping center is worth $900,000. Lolita goes to the city council with her proposal and tells the council members that the new office building will beautify the city and increase property-tax revenues. If the city council agrees to use eminent domain to allow Lolita to proceed with her project, society as a whole will
A) be made richer since property-tax revenues will increase. B) be made richer since the area will be more aesthetically beautiful. C) be made poorer since the project confers benefits that are lower than the current value of the shopping center. D) not be affected since the project only encompasses one small parcel of land.
If the economy experiences an unplanned inventory accumulation at the full employment level of GDP, then the economy is in a(n)
A. inflationary gap. B. hyperinflation. C. recessionary gap. D. full employment gap.