In a competitive market where two firms, A and B, simultaneously decide on the quantity of product to produce, what scenario best exemplifies a Nash Equilibrium? Assume both firms have the same cost structure and demand curve.

In a competitive market, a Nash Equilibrium occurs when both firms choose their production quantities in such a way that neither firm can benefit by changing its output while the other firm's output remains the same. For example, if Firm A decides to produce 100 units and Firm B also produces 100 units, and both find that this combination maximizes their profits given the other’s choice, they are in a Nash Equilibrium. If either firm tries to increase or decrease its output, it would lead to lower profits because the market price would change in a way that is not favorable. Thus, both firms have no incentive to change their production levels, as doing so would not improve their situation. This balance of decisions is what defines a Nash Equilibrium in this context.