Respuesta :
Suppose that both firms start off not advertising. If firms act independently, what strategies will they end up choosing (option B) - Both firms will advertise)
An advert is a mass or public media message with is designed to convince people to but into a product, service or an idea.
Both businesses will decide to run ads. This is so that regardless of what the other company does, both businesses benefit more from advertising.
Both businesses will decide against advertising. This is due to the Nash equilibrium of 9,9 where both companies promote being better than 11 million profit.
This is justified by the fact that neither business needs to market because doing so increases expenses and decreases revenue.
Hence, it is correct to state rival firms will end up advertising.
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Full Question:
Suppose that both firms start off not advertising. If firms act independently, what strategies will they end up choosing?
A) fizzo will choose not to advertise and Pop Hop will choose to advertise.
B) Both firms will advertise
C) Both firms will choose NOT to advertise
D) Fizzo will chose to advertise and Pop will choosenot to advertise.
