Table 11-9 Alistair Luggage and Baine Baggage Are the Only Firms Selling

question 148

Multiple Choice

Table 11-9
$\begin{array}{c}\text { Alistair's (A) Choices }\\\text { Baine's (B) Choices }\begin{array}{|c|c|c|}\hline & \begin{array}{c}\text { Increase } \\\text { advertising } \\\text { budget }\end{array} & \begin{array}{c}\text { Leave } \\\text { advertising } \\\text { budget as is }\end{array} \\\hline \begin{array}{c}\text { Increase advertising } \\\text { budget }\end{array} & \begin{array}{c}\text { A: } \$ 30,000 \text { profit } \\\text { B: } \$ 30,000 \text { profit }\end{array} & \begin{array}{c}\text { A: } \$ 10,000 \text { profit } \\\text { B: } \$ 50,000 \text { profit }\end{array} \\\hline \begin{array}{c}\text { Leave advertising } \\\text { budget as is }\end{array} & \begin{array}{c}\text { A: } \$ 50,000 \text { profit } \\\text { B: } \$ 10,000 \text { profit }\end{array} & \begin{array}{c}\text { A: } \$ 40,000 \text { profit } \\\text { B: } \$ 40,000 \text { profit }\end{array} \\\hline\end{array}\end{array}$
Alistair Luggage and Baine Baggage are the only firms selling luggage in the upscale town of Montecito. Each firm must decide on whether to increase its advertising spending to compete for customers.If one firm increases its advertising budget but the other does not, then the firm with the higher advertising budget will increase its profit. Table 11-9 shows the payoff matrix for this advertising game.
-Refer to Table 11-9.How are the firms in this advertising game caught in a prisoner's dilemma?

• A)They are not in a prisoner's dilemma because there is one clear strategy for each.
• B)They would be more profitable if they refrained from advertising but each fears that if it does not advertise, it will lose customers.
• C)Since each firm is uncertain about the other's behavior, each will adopt a wait-and-see attitude which results in no increase in market share and no new customers.
• D)Only the first mover is caught in a prisoner's dilemma because the second has a chance to observe and respond.

---

Definitions:

Nasogastric (NG) Tube Insertion

The placement of a flexible tube through the nose, down the esophagus and into the stomach, for feeding, medication delivery, or gastric decompression.

Oil-Based Lubricant

A lubricant consisting of oil, used to reduce friction between moving surfaces or parts, often used in medical procedures or personal care products.

Tube Length

The measurement from one end to the other of a tube, often critical for ensuring its proper placement and function.

Continuous Tube Feedings

A method of providing nutrition through a tube placed in the stomach or intestines, delivering food continuously over 24 hours.