Business, 24.04.2020 18:38 akp24

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

Beantown
Advertise Doesn’t Advertise
Expresso Advertise 10, 10 18, 2
Doesn’t Advertise 2, 18 11, 11

For example, the upper right cell shows that if Expresso advertises and Beantown doesn't advertise, Expresso will make a profit of $15 million, and Beantown will make a profit of $3 million. Assume this is a simultaneous game and that Expresso and Beantown are both profit-maximizing firms.

If Expresso decides to advertise, it will earn a profit of () million if Beantown advertises and a profit of () million if Beantown does not advertise.
If Expresso decides not to advertise, it will earn a profit of (_) million if Beantown advertises and a profit of (_) million if Beantown does not advertise.
If Beantown advertises, Expresso makes a higher profit if it chooses (advertise/not to advertise)
If Beantown doesn't advertise, Expresso makes a higher profit if it chooses (advertise/not to advertise)

Suppose that both firms start off not advertising. If the firms act independently, what strategies will they end up choosing?
a. Both firms will choose to advertise.
b. Expresso will choose not to advertise and Beantown will choose to advertise.
c. Both firms will choose not to advertise.
d. Expresso will choose to advertise and Beantown will choose not to advertise.

Again, suppose that both firms start off not advertising. If the firms decide to collude, what strategies will they end up choosing?

a. Both firms will choose to advertise.
b. Expresso will choose to advertise and Beantown will choose not to advertise.
c. Both firms will choose not to advertise.
d. Expresso will choose not to advertise and Beantown will choose to advertise.

Answers: 2

Show answers

Another question on Business

Business, 22.06.2019 09:50

For each of the following users of financial accounting information and managerial accounting information, specify whether the user would primarily use financial accounting information or managerial accounting information or both: 1. sec examiner 2. bookkeeping department 3. division controller 4. external auditor (public accounting firm) 5. loan officer at the company's bank 6. state tax agency auditor 7. board of directors 8. manager of the service department 9. wall street analyst 10. internal auditor 11. potential investors 12, current stockholders 13. reporter from the wall street journal 14. regional division managers

Answers: 1

Answer

Business, 23.06.2019 01:30

Jodie lives in a developing nation where the local markets are underdeveloped in terms of domestic exposure. her country wants to boost these domestic industries in the face of heavy competition from foreign players in the market. which trade practice should jodie’s country adopt to shield its domestic industries from foreign players? jodie’s country should adopt to shield its domestic industries from foreign players. typing answer

Answers: 1

Answer

Business, 23.06.2019 22:00

How do public goods limit a free market economy? a. they allow consumers to make only occasional economic decisions. b. they allow government to make some economic decisions. c. they allow consumers to make all of the economic decisions. d. they do not allow government to make any economic decisions.

Answers: 1

Answer

Business, 24.06.2019 02:00

Robert, who lives in ohio, files a lawsuit against trading post, a washington company, in an ohio state court. the trading post's only sales activity outside the state of washington occurs via its web site. according to the sliding-scale standard, the ohio court can always exercise personal jurisdiction over out-of-state defendants based on internet transactions if the court finds that the defendant has:

Answers: 2

Answer

You know the right answer?

Suppose that Expresso and Beantown are the only two firms that sell coffee. The following payoff mat...

Questions