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

question 112

Multiple Choice

If you advertise and your rival advertises,you each will earn $5 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 $15 million and the non-advertising firm will earn $1 million.Suppose this game is repeated for a finite number of times,but the players do not know the exact date at which the game will end.The players can earn collusive profits as a Nash equilibrium to the repeated play of the game if the probability the game terminates in any period is:

• A) 1.
• B) greater than 1.
• C) close to zero.
• D) None of the preceding answers is correct.

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Definitions:

Sum

The result of adding two or more numbers or quantities together to get a total.

Relative Frequency Distribution

A statistical measure that shows the frequency of different outcomes in a dataset relative to the total number of outcomes.

Proportion

The fraction of a whole that represents a part of the total population or quantity.

Data Values

The individual pieces of information collected in a study or used in calculations, which can be numerical or categorical.