Two Stores Are Located Side by Side

question 19

Multiple Choice

Two stores are located side by side. They attract customers to each other and to themselves by advertising. The profit functions of the two stores are (75 + x₂) x₁ - 2x²₁ for store 1 and (105 + x₁) x₂ - 2x²₂ for store 2, where x₁ and x₂ are total advertising expenditures by stores 1 and 2 respectively. If each store sets its advertising expenditures independently (as in Nash equilibrium) , how much would store 1 spend on advertising?

• A) $27
• B) $29
• C) $32
• D) $24
• E) None of the above.

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Definitions:

Keratin

A type of structural protein that is key to the formation of hair, nails, and the outer layer of skin in humans and animals.

Axial Skeleton

The central portion of the skeleton, consisting of the skull, vertebral column, ribs, and sternum, providing fundamental support and protection to the human body.

Z Line

The Z line is a region within the sarcomere of muscle fibers where actin filaments are anchored, playing a crucial role in muscle contraction.

Actin Filaments

Protein filaments in cells that are part of the cytoskeleton and play a vital role in muscle contraction, cell movement, and cell division.