Table 113 Firm A(Alistair's)and Firm B (Baine's)are the Only Firms

question 27

Multiple Choice

Table 11.3 Firm A(Alistair's) and Firm B (Baine's) are the only firms selling luggage in the upscale town of Adelaide.Each firm must decide on whether to increase its advertising spending to compete for customers.If one firm increases its advertising budget but the other does not, then the firm with the higher advertising budget will increase its profit.Table 11.3 shows the payoff matrix for this advertising game.
-Refer to Table 11.3.The Nash equilibrium in this game is

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

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Definitions:

Heavy Users

Consumers who purchase and use products or services far more frequently than the average customer, often contributing disproportionately to sales and profits.

Total Demand

The entire quantity of a product or service that consumers in a market are willing and able to purchase at various prices during a specified period.

Rule

A prescribed guideline for conduct or action established by an authority.

Demographic Information

Data that describes the characteristics of a specific population, such as age, sex, income level, and education.