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

question 95

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. Which of the following is true?

• A) A dominant strategy for firm A is to advertise.
• B) A dominant strategy for firm B is to advertise.
• C) A Nash equilibrium is for both firms to advertise.
• D) None of the preceding answers is correct.

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Definitions:

Public Charge

An individual who relies on public resources for support, often used in immigration policy to assess the potential dependency of new entrants.

Estates

Historically, a social or political class; in modern terms, often refers to a substantial area of land or property.

Benjamin Franklin

A Founding Father of the United States, renowned for his contributions to the drafting of the Declaration of Independence and the U.S. Constitution, as well as his inventions and scientific discoveries.

Dividends

The part of corporate profits paid to its shareholders.