Question

Select the correct answer:

Nash equilibrium occurs only if the game is played in Nashville, TN. (True/False)

A prisoners’ dilemma has no equilibrium. (True/False)

Firms in monopolistic competition often undertake extensive advertising. (True/False)

A firm in monopolistic competition faces a downward-sloping demand curve. (True/False)

Oligopoly is always efficient (True/False)

Answer 1

1.-FALSE. The nash equilibrium is a concept in the game theory, the final outcome of the game is where no player has an incentive to move away from his or her chosen strategy after considerng the opponent's choice. One game may have multiple nash equilibrium or none at all. The nash equilibrium is named after the American mathematician Jhon Nash, so that is why it is called Nash equilibrium.

2.-FALSE- A game may have one equilibrium or multiple equilibrium

3.- TRUE- Monopolistic firms uses the advertising to get a certain percentage of market share for making a change in their product's prices.

4- TRUE-The demand curve for the individual monopolist firm is downward sloping, this is because of in the monopolistic competition the firms got the market power so they are able to raise their prices without losing their customers.

5- FALSE- There is always tendency for the firms to move away from the cartels