Table 9-6 Godrickporter and Star Connections Are the Only

question 317

Multiple Choice

Table 9-6 Godrickporter and Star Connections are the only two airport shuttle and limousine rental service companies in the mid-sized town of Godrick Hollow. Each firm must decide whether to increase its advertising spending to compete for customers. Table 9-6 shows the payoff matrix for this advertising game.
-Refer to Table 9-6.Let's suppose the game starts with each firm adhering to its original budget so that Godrickporter earns a profit of $6000 and Star Connections earns a profit of $12 000.Is there an incentive for any one firm to increase its advertising budget?

• A) No, neither firm has an incentive to increase its advertising spending.
• B) Yes, both firms have an incentive to increase their advertising budgets.
• C) Yes, Star Connections has an incentive to increase its advertising budget, but Godrickporter does not.
• D) Yes, Godrickporter has an incentive to increase its advertising budget, but Star Connections does not.

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Definitions:

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Fetus

A developing mammal or human from the completion of embryonic development to birth, characterized by rapid growth and the development of body structures.

Embryo

A stage in prenatal development after fertilization and before becoming a fetus, characterized by rapid cell division and the start of cell differentiation.

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A developmental disorder characterized by difficulties in social interaction, communication, and by restricted or repetitive patterns of thought and behavior.