If You Advertise and Your Rival Advertises, You Each Will

question 49

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 only one year, the Nash equilibrium is:

• A) for each firm to advertise.
• B) for neither firm to advertise.
• C) for your firm to advertise and the other not to advertise.
• D) None of the answers is correct.

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Definitions:

Physical Needs

Basic human requirements for survival and well-being, such as food, water, shelter, and sleep.

Intrinsic Benefits

Advantages or positive aspects inherent to something, not dependent on external factors.

Benefit

An advantage, gain, or positive outcome derived from a situation, action, or policy.

Maslow's Hierarchy

A theory in psychology proposed by Abraham Maslow, depicting a five-tier model of human needs, arranged in a hierarchy from basic needs to self-actualization.