Two Stores Are Located Side by Side

question 9

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 (75 + 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) $14
• B) $19
• C) $22
• D) $17
• E) None of the above.

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Definitions:

Strengths And Weaknesses

The positive attributes and areas for improvement that an individual or organization possesses, relevant to achieving goals or tasks.

Place Within An Organization

The role, position, or status an individual occupies within an organizational structure.

Katz's Skills Model

A framework suggesting that effective leadership depends on three basic personal skills: technical, human, and conceptual.

Top Management

The highest level of management in an organization, responsible for strategic decision-making and overall direction.