Final answer:
A Nash Equilibrium occurs when each player maximizes their utility based on other players' strategies, and can't benefit from changing their strategy unilaterally. In economics, utility refers to the satisfaction a person derives from their choices, guiding their decision-making process.
Step-by-step explanation:
In the context of game theory within economics, a Nash Equilibrium is reached in a game when every player is choosing the best strategy they can, given the strategies all the other players have chosen. It refers to a situation where no player can benefit by changing their strategy while the other players keep their strategies unchanged. This concept is pivotal in the study of economics because it gives insight into the decision-making process.
Each player in the Nash Equilibrium is maximizing their utility, which, as defined by economists, is the level of satisfaction or happiness a person gains from their choices.Option c from the question accurately reflects this concept: c. each player is maximizing their payoffs given the current behaviour of the other players.
Utility plays a crucial role in this as it drives the player's decision towards what they perceive as the best outcome for themselves. José, for instance, is looking for the combination of choices that will maximize his utility.