Refer to the Following Figure Showing the Reaction Functions of Oligopoly

question 31

Multiple Choice

Refer to the following figure showing the reaction functions of oligopoly firms A and B.

-If firm B expects firm A will run 2 ads, then firm B should run _____ ads in order to maximize its own profit.

• A) 1
• B) 3
• C) 5
• D) 6
• E) 7

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Definitions:

Taxable Income

The amount of income that is subject to income tax after deductions and exemptions.

Deductions

Amounts that are subtracted from gross income when calculating taxable income, including expenses, allowances, or specific exemptions.

Exemptions

Specific allowances that relieve individuals, organizations, or products from fulfilling certain conditions or requirements, often for taxes or regulations.

Personal Income Tax

A tax levied on individuals or households based on their total income from various sources, including wages, salaries, and investments.