Given the scenario where Gary's Gym reduces its prices while eFitness increases its advertising efforts, which of the following outcomes best represents the Nash equilibrium in this situation?

In the scenario where Gary's Gym lowers its prices and eFitness boosts its advertising, a Nash equilibrium occurs when neither gym can improve its situation by changing its strategy alone. For example, if Gary's Gym lowers prices to attract more customers, eFitness might think that increasing advertising will bring in more clients. However, if both gyms keep adjusting their strategies without considering what the other will do, they may end up in a situation where neither gains a significant advantage. A Nash equilibrium would be reached when both gyms settle on their strategies, where Gary's Gym finds a price that maintains its customers, while eFitness's advertising attracts enough new clients to balance its costs. In this situation, both gyms are satisfied with their strategies, knowing that changing them would not lead to a better outcome for either.