Question

Suppose that Thierry and Abdul are duopolists. Thierry is producing 700 units of output, and Abdul is producing 500 units of output. When Abdul produces 500 units, Thierry maximizes profit by producing 700 units. When Thierry produces 700 units of output, Abdul maximizes profit by producing 500 units. Thierry and Abdul are ___________.a. pricing at the minimum of marginal cost.
b. in a competitive market.
c. engaging in mark-up pricing.
d. at a Nash equilibrium

Answer 1

Answer:

b. in a competitive market.

Explanation:

Answer 2

Answer:

D) at a Nash equilibrium

Explanation:

A Nash Equilibrium is a concept that originates from game theory where both players have reached an optimal equilibrium (in this case both Thierry and Abdul maximize their profits), so no one will even try a different strategy.

If any of the players (Thierry and Abdul) changes their operating strategy, it might result in a loss for one or both of them, so no one will change it. Thierry will continue to produce 700 units in order to maximize his profit and Abdul will continue to produce 500 units to maximize his profit.