Business, 24.03.2020 01:53 alex7078

Suppose that Creamland and Dairy King are the only two firms that sell ice cream. The following payoff matrix shows the profit (in millions of dollars) each company will earn depending on whether or not it advertises:

Dairy King
Advertise Not advertise
Creamland Advertise 10.10 18.2
Not advertise 2.18 11.11

For example, the upper right cell shows that if Creamland advertises and Dairy King doesn't advertise, Creamland will make a profit of $18 million, and Dairy King will make a profit of $2 million. Assume this is a simultaneous game and that Creamland and Dairy King are both profit-maximizing firms.

If Creamland decides to advertise, it will earn a profit of million if Dairy King advertises and a profit of million if Dairy King does not advertise.

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Suppose that Creamland and Dairy King are the only two firms that sell ice cream. The following payo...

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