Juan Pablo and Zak are competitors in a local market. Each is trying to decide if it is better to advertise on TV, on radio, or not at all. If they both advertise on TV, each will earn a profit of $8,000 . If they both advertise on radio, each will earn a profit of $14,000 . If neither advertises at all, each will earn a profit of $20,000 . If one advertises on TV and other advertises on radio,
then the one advertising on TV will earn $12,000 and the other will earn $10,000 . If one advertises on TV and the other does not advertise, then the one advertising on TV will earn $22,000 and the other will earn $4,000 . If one advertises on radio and the other does not advertise, then the one advertising on radio will earn $24,000 and the other will earn $8,000 . If both follow their dominant strategy, then Juan Pablo will
a. advertise on TV and earn $8,000.
b. advertise on radio and earn $14,000.
c. advertise on TV and earn $22,000.
d. not advertise and earn $20,000.
b
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If a tax cut increases aggregate demand more than aggregate supply, real GDP ________ and the price level ________
A) decreases; rises B) increases; does not change C) decreases; falls D) increases; falls E) increases; rises
How do the banks create money?
A. When there is a decrease in checking account deposits, banks lose reserves and reduce their loans, and the money supply expands B. When there is an increase in checking account deposits, banks gain reserves and make new loans, and the money supply expands C. Banks buy bonds in the open market and gain reserves; this excess reserve holding increases the money supply