Suppose That Each of the Only Two Firms in an Industry

question 119

Multiple Choice

Suppose that each of the only two firms in an industry has the independent choice of advertising its product or not advertising.If neither advertises, each gets $20 million in profit; if both advertise, their profits will be $10 million each; and if one advertises while the other does not, the advertiser gets $25 million profit while the other gets $4 million profit.According to game theory, the likely strategy by the firms is:

• A)both may or may not advertise.
• B)one will advertise and the other will not.
• C)both will advertise.
• D)neither will advertise.

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Definitions:

Punctuated Correctly

The correct use of punctuation marks in writing to clarify meaning.

Conjunctions

Words used to connect clauses, sentences, or words in the same clause, such as "and", "but", and "or".

Punctuated Correctly

Refers to text that has been marked with punctuation marks accurately according to grammatical rules.

Conjunctions

words that connect clauses, sentences, or words in a sentence, e.g., and, but, or.