Dave and Andy Are Competitors in a Local Market

question 409

Multiple Choice

Dave and Andy are competitors in a local market.Each is trying to decide if it is better to advertise on TV,on radio,or not at all.If they both advertise on TV,each will earn a profit of $4,000.If they both advertise on radio,each will earn a profit of $7,000.If neither advertises at all,each will earn a profit of $10,000.If one advertises on TV and other advertises on radio,then the one advertising on TV will earn $6,000 and the other will earn $5,000.If one advertises on TV and the other does not advertise,then the one advertising on TV will earn $11,000 and the other will earn $2,000.If one advertises on radio and the other does not advertise,then the one advertising on radio will earn $12,000 and the other will earn $4,000.If both follow their dominant strategy,then Dave will

• A) advertise on TV and earn $4,000.
• B) advertise on radio and earn $7,000.
• C) advertise on TV and earn $11,000.
• D) not advertise and earn $10,000.

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Definitions:

Biological Impulses

Innate urges or drives that dictate behavior, such as hunger, thirst, and reproduction.

Freud's Theory

A set of psychoanalytic theories developed by Sigmund Freud, centering on unconscious desires, childhood experiences, and sexual and aggressive instincts driving human behavior.

Social Restraints

The limitations or boundaries set by society or culture that dictate acceptable behavior and inhibit certain actions.

Rorschach Inkblot Test

A projective psychological test consisting of 10 inkblots that the participant is asked to interpret, intended to reveal a person's unconscious thoughts, motives, or desires.