What is the amount of profit Tumbleweed makes when both advertise? $ How much profit does Native Roots make when both advertise? $ Part 2 (1 point)See Hint What outcome is predicted (that is, the Nash equilibrium) for these two firms, given the figures above? Choose one: A. Both firms advertise. B. Tumbleweed advertises, but Native R

Complete Question:

There are two plant nurseries in a small town. They are called Tumbleweed and Native Roots. If neither advertises, Tumbleweed makes $80,000 a month in profits and Native Roots makes $95,000. Advertising would cost each firm $20,000 a month. If only one firm advertises, that firm increases sales by $50,000 a month whereas the non-advertising firm loses out. If Tumbleweed doesn't advertise but Native Roots does, Tumbleweed loses $30.000 a month. If Native Roots doesn't advertise but Tumbleweed does, it loses $35,000 a month. If both advertise, they increase revenue by $15,000 each. Insofar as they grow their products from the ground, they don't have any increased costs when they have increased sales (that is, their marginal cost of production is $0). 7th attempt Part 1 (2 points) See Hint What is the amount of profit Tumbleweed makes when both advertise? $ How much profit does Native Roots make when both advertise? $ See Hint Part 2 (1 point) What outcome is predicted (that is, the Nash equilibrium) for these two firms, given the figures above? Choose one: • A. Both firms advertise. B. Tumbleweed advertises, but Native Roots doesn't. C. Native Roots advertises, but Tumbleweed doesn't. D. Neither firm advertises.

Tumbleweed and Native Roots

Part 1:

a. The amount of profit that Tumbleweed makes when both advertise is:

= $95,000 ($80,000 + $15,000)

b. The amount of profit that Native Roots makes when both advertise is:

= $110,000 ($95,000 + $15,000)

Part 2:

The predicted outcome (that is, the Nash equilibrium) for these two firms, given the figures above is:

A. Both firms advertise.

Explanation:

a) Data and Calculations:

                                                           Tumbleweed  Native Roots

Profits without advertisement              $80,000         $95,000

Advertising cost per month                    20,000           20,000

Loss without advertisement                  -30,000          -35,000

Gain with advertisement                        50,000           50,000

Gain if both firms advertise                    15,000            15,000

if it is for a job, then you should learn everything you can about the job, like what does it involve, what qualification is required and how you are the right person for that job. dress appropriately for the interview. get plenty of rest the night before. good luck!