Table 17-2 Suppose That Two Firms Determine That Each Could Lower Its

question 334

Multiple Choice

Table 17-2
Suppose that two firms determine that each could lower its costs and increase its profits if both reduced their advertising budgets.But in order for the plan to work,each firm must agree to refrain from advertising.Each firm believes that advertising works by increasing the demand for the firm's product,but each firm also believes that if neither firm advertises,the cost savings will outweigh the lost sales.The table below lists each firm's individual profits:
Firm A
Breaks agreement Maintains agreement
and advertises and does not advertise

-Refer to Table 17-2.What is the outcome of this game?

• A) Firm A will advertise but Firm B will not.
• B) Firm A will not advertise but Firm B will.
• C) Neither Firm A nor Firm B will advertise.
• D) Both Firm A and Firm B will advertise.

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Definitions:

Paragraph Arrangement

The organized and logical sequencing of paragraphs in a piece of writing to ensure coherent flow of ideas and information.

Business Communication

The sharing of information between people within a corporation or between a company and its customers, intended to achieve organizational goals.

Adaptation

A process of change where an organism or species becomes better suited to its environment.

Writing

The act or process of composing text for various purposes, such as storytelling, information dissemination, or record keeping.