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

question 358

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.What is the Nash equilibrium in this game?

• A)There is no Nash equilibrium.
• B)Godrickporter increases its advertising budget, but Star Connections does not.
• C)Star Connections increases its advertising budget, but Godrickporter does not.
• D)Both Godrickporter and Star Connections increase their advertising budgets.