If You Advertise and Your Rival Advertises,you Each Will Earn

question 62

Multiple Choice

If you advertise and your rival advertises,you each will earn $4 million in profits.If neither of you advertises,you will each earn $10 million in profits.However,if one of you advertises and the other does not,the firm that advertises will earn $1 million and the non-advertising firm will earn $5 million.If you and your rival plan to be in business for only one year,the Nash equilibrium is:

• A) for each firm to advertise.
• B) for neither firm to advertise.
• C) for your firm to advertise and the other not to advertise.
• D) None of the preceding answers is correct.

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Definitions:

Fixed Ratio

Fixed ratio refers to a schedule of reinforcement where a response is reinforced only after a specified number of responses, commonly used in behavior modification.

Reinforcement

In psychology, a process by which an individual's behavior is conditioned by rewards or punishments.

Desired Behavior

The specific actions or responses that are sought after in individuals or groups within certain contexts or scenarios.

Specified Number

A particular or defined quantity.