In a coordination game where two firms must decide whether to enter a market or stay out, which scenario best illustrates the concept of Nash Equilibrium?

A Nash Equilibrium occurs when each player in a game makes the best decision they can, considering the choices of others, and no one has an incentive to change their decision. In the case of two firms deciding whether to enter a market, imagine both firms choose to enter. If both firms believe that entering the market will lead to more profit, and if neither firm can improve their situation by unilaterally changing their decision to stay out, this situation is a Nash Equilibrium. For example, if Firm A and Firm B both enter the market and earn profits, neither firm would want to change their choice to stay out because they would miss out on potential earnings. Thus, both firms sticking to their decision to enter is a stable outcome where neither has a reason to change.