If You Advertise and Your Rival Advertises, You Each Will

question 32

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.Suppose this game is repeated for a finite number of times, but the players do not know the exact date at which the game will end.The players can earn profits of $10 each period as a Nash equilibrium to a repeated play of the game if the probability the game terminates at the end of any period is

• A)close to 1.
• B)close to 0.
• C)between zero and one.
• D)all of the statements associated with this question are correct.

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Definitions:

Trademark

A symbol, word, or phrase legally registered or established by use as representing a company or product, protecting the brand's identity.

Business-Generated Revenue

Income that a company earns from its activities, typically from the sale of goods or services to customers.

Sole Proprietorships

A business structure owned by one person, where there is no legal distinction between the owner and the business entity.

Partnerships

A lawful business structure involving two or more people who divide both the management responsibilities and the profits.