Two Stores Are Located Side by Side

question 34

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 (45 + x₂) x₁ - 2x²₁ for store 1 and (90 + 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) $18
• B) $20
• C) $15
• D) $23
• E) None of the above.

---

Definitions:

Fast-moving Neutrons

Neutrons with high kinetic energy, often associated with nuclear reactions, that can initiate fission in certain materials.

High-level Wastes

Radioactive waste produced by nuclear reactors, reprocessing plants, and from the decommissioning of nuclear facilities, presenting serious hazards due to its high radiation levels.

Uranium-235

A naturally occurring isotope of uranium with a capacity for nuclear fission, making it a key component in nuclear reactors and weapons.

Nonrenewable Fossil Fuels

Energy sources like oil, coal, and natural gas, that cannot be replenished on a human timescale once depleted.