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

question 82

Multiple Choice

If you advertise and your rival advertises,you each will earn $3 million in profits.If neither of you advertises,you will each earn $7 million in profits.However,if one of you advertises and the other does not,the firm that advertises will earn $10 million and the non-advertising firm will earn $1 million.If you and your rival plan to hand your business down to your children,and this "bequest" goes on forever,then a Nash equilibrium when the interest rate is zero is for:

• A) your firm to never advertise.
• B) your firm to always advertise when your rival does, provided that the interest rate is sufficiently large.
• C) each firm to not advertise until the rival does, and then to advertise forever provided the interest rate is sufficiently low.
• D) each firm to advertise until the rival does not advertise, and then not advertise forever.

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Definitions:

Contextual Aspect

The elements or conditions surrounding a situation or event that contribute to its meaning or consequences.

Situational Aspect

The context or circumstances that surround an event or behavior, influencing its outcome or nature.

Perseverance

Persistent effort and determination in pursuing goals despite obstacles, difficulties, or discouragement.

LPC Scale

A tool used in Fiedler's contingency theory to identify leadership style based on the least preferred coworker, distinguishing task-oriented from relationship-oriented leaders.