APFIVE Nash Equilibrium in a Duopoly
If the strategies chosen by two firms in a duopoly constitute a Nash equilibrium, which of the following must be true?
A
One firm is dominating the market, which forces the other to eventually exit.
B
The equilibrium indicates that both firms are colluding to secure higher collective profits.
C
Both firms are maximizing joint profits and will always cooperate.
D
Neither firm can improve its payoff by unilaterally changing its strategy.
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