The Firms Shown in the Following Table Wish to Increase

question 50

Essay

The firms shown in the following table wish to increase their sales by either advertising or decreasing their price. What is the optimal strategy for each form according to the table, with DEF's payoff listed in the top row of each outcome?
$\begin{array}{c} \quad \quad \quad \quad \quad \quad \quad \quad \quad {\text { ABC, Inc. }} \\\begin{array}{llll} & & \text { Advertise } & \text { Cut price } \\& \text { Advertise } & \$ 1.0 \mathrm{M} & \$ 0.5 \mathrm{M} \\\text { DEF, Inc. } & & \$ 1.0 \mathrm{M} & \$ 2.0 \mathrm{M} \\& \text { Cut price } & \$ 2.0 \mathrm{M} & \$ 0.75 \mathrm{M} \\& & \$ 0.5 \mathrm{M} & \$ 0.75 \mathrm{M}\end{array}\end{array}$

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Definitions:

Rivers

Large natural streams of water flowing in channels to the sea, a lake, or another river.

Nonbiological Reservoirs

Natural or artificial environments that do not involve living organisms, which can store various substances or elements.

Biogeochemical Cycles

Natural pathways by which essential elements or compounds move through the biosphere, lithosphere, atmosphere, and hydrosphere.

Carbon

A chemical element with symbol C, capable of forming many compounds including carbon dioxide and organic molecules.