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.

---

Definitions:

Negative Freedom

Refers to the absence of obstacles, barriers, or constraints, allowing individuals the freedom to act without external interference.

Positive Freedom

Refers to the power or capacity to act upon one’s free will, often associated with the ability to fulfill one's true potential.

Kant

Refers to Immanuel Kant, an 18th-century German philosopher known for his work in epistemology, ethics, and aesthetics.

Theoretical Standpoint

A perspective or viewpoint informed by a coherent set of theoretical ideas, often guiding analysis or interpretation.