As this chapter explains, the movie A Beautiful Mind is a biography of John Nash
There is a scene in the movie where the John Nash character (played by Russell Crowe) is at a bar with several friends and has the insight that becomes what we now call a Nash equilibrium. Here is a game that summarizes what happened in that scene. Several women enter the bar; one of the women is very beautiful. All of the men would prefer to dance with the beautiful woman. They know that if one man asks the beautiful woman to dance that she will accept but that if two of the men ask her to dance she will refuse to dance with either of them. The John Nash character argues that none of the men should ask the beautiful woman to dance but should instead ask the other women. Do you think the director of this movie has studied game theory?
Probably not. The John Nash character has not described a Nash equilibrium. In a Nash equilibrium, each player chooses a strategy that is a best response to the other players' strategies. If none of the other men have asked the beautiful woman to dance, then each of the men's best response is to ask her to dance. Perhaps the moral of the story is that Hollywood should not discuss economics and economists should not make movies.
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Shift to the left or right for supply:price of product
What will be an ideal response?
Recall the Application about the British experience with private water companies in the nineteenth century to answer the following question(s).Recall the Application. The British experience with water privatization showed that the distribution of water is:
A. a natural monopoly. B. best left as a deregulated market. C. best set up as a trust. D. a classic example of price fixing.
The diagram concerns supply adjustments to an increase in demand (D 1 to D 2 ) in the immediate market period, the short run, and the long run. In the immediate market period, the increase in demand will:
A. have no effect on either equilibrium price or quantity.
B. increase equilibrium price but not equilibrium quantity.
C. increase equilibrium quantity but not equilibrium price.
D. increase both equilibrium price and quantity.
If the quantity of money starts to grow more rapidly than real GDP and velocity does not change, the result is
A) slower growth in the price level. B) an increase in investment. C) more rapid growth in potential GDP. D) the inflation rate rises. E) an eventual slowing in the growth rate of the quantity of money.