Business, 24.03.2020 05:25, trobbie817

Table 17-29 Suppose that two firms, Wild Willy's Wonderdrink (Firm W) and Hyper Hank's Hydration (Firm H), comprise the market for energy drinks. Each firm determines that it could lower its costs and increase its profits if both firms reduced their advertising budgets. But for the plan to work, each firm must agree to refrain from advertising. Each firm believes that advertising works by increasing the demand for the firm's energy drinks, but each firm also believes that if neither firm advertises, the cost savings will outweigh the lost sales. The table below lists each firm's individual profits:

Firm W

Breaks agreement Maintains agreement and advertises and does not advertise

Firm H Breaks agreement and advertises Firm W's profit = $16,500 Firm H's profit = $5,000 Firm W's profit = $14,000 Firm H's profit = $11,000
Maintains agreement and does not advertise Firm W's profit = $24,000 Firm H's profit = $4,000 Firm W's profit = $22,500 Firm H's profit = $10,000
Refer to Table 17-29. Which of the following statement(s) correctly characterizes the outcome of this game?

A. Although both firms collectively would earn higher profits by maintaining the agreement not to advertise, self-interest will cause each firm to break the agreement.
B. There is a Nash equilibrium when both firms advertise.
C. Both Firm W and Firm H have a dominant strategy to advertise.
D. All of the above are correct.

Answers: 2

Show answers

Other questions on the subject: Business

Business, 22.06.2019 07:20, staxeeyy767

Richardson hired j. c. flood company, a plumbing contractor, to correct a stoppage in the sewer line of her house. the plumbing company's 'snake' device, used to clear the line leading to the main sewer, became caught in the underground line. to release it, the company excavated a portion of the sewer line in richardson's backyard. in the process, the company discovered numerous leaks in a rusty, defective water pipe that ran parallel with the sewer line. to meet public regulations, the water pipe, of a type no longer approved for such service, had to be replaced either then or later, when the yard would have to be excavated again. the plumbing company proceeded to repair the water pipe. though richardson inspected the company's work daily and did not express any objection to the extra work involved in replacing the water pipe, she refused to pay any part of the total bill after the company completed the entire operation. j. c. flood company then sued richardson for the costs of labor and material it had furnished. (c) for what, if anything, should richardson be liable? explain."

Answers: 1

continue

Business, 22.06.2019 11:10, flippinhailey

Suppose that the firm cherryblossom has an orchard they are willing to sell today. the net annual returns to the orchard are expected to be $50,000 per year for the next 20 years. at the end of 20 years, it is expected the land will sell for $30,000. calculate the market value of the orchard if the market rate of return on comparable investments is 16%.

Answers: 1

continue

Business, 22.06.2019 11:10, Emmaxox715

Yowell company granted a sales discount of $360 to a customer when it collected the amount due on account. yowell uses the perpetual inventory system. which of the following answers reflects the effects on the financial statements of only the discount? assets = liab. + equity rev. − exp. = net inc. cash flow a. (360 ) = na + (360 ) (360 ) − na = (360 ) (360 ) oa b. na = (360 ) + 360 360 − na = 360 na c. (360 ) = na + (360 ) (360 ) − na = (360 ) na d. na = (360 ) + 360 360 − na = 360 na

Answers: 1

continue

Business, 22.06.2019 23:00, jcrowley9362

How is challah bread made? if i have to dabble the recipe?

Answers: 1

continue

Do you know the correct answer?

Table 17-29 Suppose that two firms, Wild Willy's Wonderdrink (Firm W) and Hyper Hank's Hydration (Fi...