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

question 72

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 10 years,then the Nash equilibrium is:

• A) for each firm to advertise every year.
• B) for neither firm to advertise in early years, but to advertise in later years.
• C) for each firm to not advertise in any year.
• D) for each firm to advertise in early years, but not advertise in later years.

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Definitions:

Personal Space

A zone of space surrounding a person that is felt to “belong” to that person.

Communication Process

The communication process is the sequence of steps through which information is conveyed from a sender to a receiver, encompassing message creation, transmission, reception, and interpretation.

Sender

The entity in communication who is responsible for creating and transmitting a message to a receiver.

Intrapersonal Communication

The process of internal dialogue or communication with oneself, which involves thinking, self-talk, and personal reflection.