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:

National Committee for Quality Assurance

An organization that works to improve health care quality through the administration of evidence-based standards, measures, programs, and accreditation.

Nonprofit Organization

An organization dedicated to furthering a particular social cause or advocating for a shared point of view, without the goal of making profits for its owners or members.

Managed Care Plans

A type of health insurance plan that contracts with medical providers and facilities to provide care for members at reduced costs.

Use It or Lose It

a principle suggesting that failing to regularly engage skills or abilities can lead to their deterioration over time.