If You Advertise and Your Rival Advertises, You Each Will

question 41

Multiple Choice

If you advertise and your rival advertises, you each will earn $4 million in profits.If neither of you advertise, you will each earn $10 million in profits.However, if one of you advertises and the other does not, the firm that advertises will earn $1 million and the non advertising firm will earn $5 million. Which of the following is true?

• A)A dominant strategy for Firm A is to advertise.
• B)A dominant strategy for Firm B is to advertise.
• C)A Nash equilibrium is for both firms to advertise.
• D)None of the statements associated with this question are correct.

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Definitions:

Strategic Control

A management process used to track the strategy as it is being implemented, detecting any problem areas or potential improvements.

Virtual Organization

Describes a network of independent organizations, resources, or individuals that function and appear as a single entity through the use of digital technologies.

Holacracy

A method of decentralized management and organizational governance, where decision-making is distributed to self-organizing teams rather than being centralized in a traditional management hierarchy.

Decentralized

The distribution of functions, powers, people, or things away from a central location or authority.