Table 11-6 Godrickporter and Star Connections Are the Only Two Airport Shuttle

question 301

Multiple Choice

Table 11-6
$\begin{array}{c} \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad\text { Godrickporter's (G) Choices }\\\text { Star Connections' (S) Choices }\begin{array}{|c|c|c|}\hline & {\begin{array}{c}\text { Increase } \\\text { advertising } \\\text { budget }\end{array}} & {\begin{array}{c}\text { Leave } \\\text { advertising } \\\text { budget as is }\end{array}} \\\hline \begin{array}{c}\text { Increase advertising } \\\text { budget }\end{array} & \begin{array}{c}\mathrm{G}: \$ 16,000 \text { profit } \\\mathrm{S}: \$ 8,000 \text { profit }\end{array} & \begin{array}{c}\mathrm{G}: \$ 12,000 \text { profit } \\\mathrm{S}: \$ 15,000 \text { profit }\end{array} \\\hline \begin{array}{c}\text { Leave advertising } \\\text { budget as is }\end{array} & \begin{array}{l}\mathrm{G}: \$ 8,000 \text { profit } \\\mathrm{S}: \$ 10,000 \text { profit }\end{array} & \begin{array}{l}\mathrm{G}: \$ 6,000 \text { profit } \\\mathrm{S}: \$ 12,000 \text { profit }\end{array} \\\hline\end{array}\end{array}$
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 11-6 shows the payoff matrix for this advertising game.
-Refer to Table 11-6.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.

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Definitions:

Psychopaths

Individuals who exhibit a long-term pattern of manipulating, exploiting, or violating the rights of others, often without any remorse.

Heightened Ability

An enhanced or increased skill set beyond the average level, often specific to a particular function or activity.

Obsessive-Compulsive Personality

A behavioral disorder marked by an ongoing obsession with being orderly, perfect, and in control, which negatively impacts their ability to be flexible, open, and efficient.

Inflexibility

The lack of adaptability or willingness to change one's opinions, behavior, or plans, often leading to difficulties in various aspects of life.