Two Competitive Firms Are Located Side by Side

question 43

Multiple Choice

Two competitive firms are located side by side.If firm A advertises,firm B will get new customers too,even though it does not have to pay for the advertising cost.The same scenario is true for A if B advertises.If both advertise,the amount of extra revenue generated would just offset the advertising costs.In such case,game theory suggests

• A) that only A will advertise.
• B) that only B will advertise.
• C) that both A and B will advertise.
• D) that neither A nor B will advertise.
• E) nothing in terms of predicting the outcome of the game.

Identify assignable variations and the factors that cause them.

Understand and apply the concepts of control charts, including centerline and control limits.

Recognize the indications of a process being in or out of control.

Understand the concepts of Type I and Type II errors in statistical process control.