Table 14-1 Godrickporter and Star Connections Are the Only Two Airport Shuttle

question 259

Multiple Choice

Table 14-1

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 14-1 shows the payoff matrix for this advertising game.
-Refer to Table 14-1.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 budget.
• 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:

Personal Fable

a cognitive distortion experienced by adolescents, believing that their thoughts, feelings, and experiences are unique and not understood by others.

Adolescent Egocentrism

A characteristic of adolescent thinking that leads to an over-focus on oneself, often resulting in feelings of uniqueness and invulnerability.

Mathematical Ability

The capacity to understand, apply, and manipulate mathematical concepts, operations, and puzzles.

Formal Operations

A stage in Piaget's theory of cognitive development, typically starting around age 12, where an individual gains the ability to think abstractly and logically.