Table 12.1 Godrickporter and Star Connections Are the Only Two Airport Shuttle

question 41

Multiple Choice

Table 12.1

Godrickporter and Star Connections are the only two airport shuttle and limousine rental service companies in the mid-sized town of Godrick Hollow. Each firm must decide on whether to increase its advertising spending to compete for customers. Table 12.1 shows the payoff matrix for this advertising game.
-Refer to Table 12.1.Let's suppose the game starts with each firm adhering to its original budget so that Godrickporter earns a profit of $6,000 and Star Connections earns a profit of $12,000.Is there an incentive for any one firm to increase its advertising budget?

• A)No, neither firm has an incentive to raise its advertising spending.
• B)Yes, both firms have an incentive to raise their advertising budgets.
• C)Yes, Star Connections has an incentive to increase its advertising budget, but Godrickporter does not.
• D)Yes, Godrickporter has an incentive to increase its advertising budget, but Star Connections does not.

Recognize the role of unemployment benefits and the criteria for their receipt.

Identify the largest income and in-kind redistribution programs in the United States.

Analyze the impact of government programs and taxes on income equality.

Explain the determination of the official poverty line and its implications.

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Definitions:

Increasing Opportunity Costs

A principle stating that as the production of a good increases, the opportunity cost of producing an additional unit of this good also increases.

Bowed-Out Shape

Describes a concave production possibilities frontier that reflects increasing opportunity costs as production of one good is increased.

Attainable And Unattainable

Describes whether a certain state or outcome can be achieved with the available resources (attainable) or not (unattainable), often used in the context of production and economics.

Prices Of Commodities

The current market values assigned to raw or primary products.