Nash Equilibrium

Coffee Shop Price Competition

Consider a model of the market for rental apartments in a city. The model is in a stable, self-perpetuating state where the number of apartments landlords are willing to rent out at the current monthly price is exactly equal to the number of apartments tenants are willing to rent. According to the definition of an equilibrium, which of the following events represents an external force that would disrupt this state?

Identifying an Equilibrium State

Analyzing a Social Convention as an Equilibrium

Consider a model of a local farmers' market where all vendors are currently selling their apples for $5 per bag. One vendor realizes they could attract significantly more customers and increase their profits by lowering their price to $4.50 per bag. The current state, where all vendors sell at $5, is an equilibrium because it is the current outcome.

An equilibrium is defined as a self-perpetuating outcome within a model, meaning it will persist unless acted upon by an external force. Which of the following scenarios describes a situation that is not in equilibrium because the outcome is not self-perpetuating?

Analyzing the Link Between CO2 Emissions and Coral Reef Decline

Match each scenario with the description that correctly applies the concept of equilibrium, defined as a self-perpetuating outcome that persists unless disturbed by an external force.

A new smartphone model is released with limited initial stock, creating a secondary resale market. The following events describe how this market might reach a stable, self-perpetuating price. Arrange these events in the logical order that leads to this stable outcome.

Consider a model of commuter traffic between a residential area and a downtown district. There are two possible routes: a direct highway and a longer scenic route. The travel time on the scenic route is always 40 minutes. The travel time on the highway depends on the number of cars; it is 20 minutes with no traffic but increases as more cars use it. The current situation is that traffic is split between the two routes such that the travel time for both is exactly 40 minutes. Why is this specific distribution of cars considered a self-perpetuating outcome?