For example, the lower left cell of the matrix shows that if Full Coop advertises and Lucky Bird does not advertise, Full Coop will make a profit of $14 million, and Lucky Bird will make a profit of $3 million. Assume this is a simultaneous game and that Lucky Bird and Full Coop are both profit- maximizing firms. If Lucky Bird chooses to advertise, it will earn a profit of $ advertise. million if Full Coop advertises and a profit of $ million if Full Coop does not If Lucky Bird chooses not to advertise, it will earn a profit of $ not advertise. million if Full Coop advertises and a profit of $ million if Full Coop does S If Full Coop advertises, Lucky Bird makes a higher profit if it chooses If Full Coop doesn't advertise, Lucky Bird makes a higher profit if it chooses Suppose that both firms start off by deciding not to advertise. If the firms act independently, what strategies will they end up choosing? Both firms will choose not to advertise. O Lucky Bird will choose not to advertise and Full Coop will choose to advertise. O Lucky Bird will choose to advertise and Full Coop will choose not to advertise. Both firms will choose to advertise. Again, suppose that both firms start off not advertising. If the firms decide to collude, what strategies will they end up choosing? O Lucky Bird will choose not to advertise and Full Coop will choose to advertise. Both firms will choose not to advertise. Lucky Bird will choose to advertise and Full Coop will choose not to advertise. Both firms will choose to aduertice F2 80 a F4 @ 12 $ 74 #3 W E S N MacBook Air F5 % 25 বর Dil DD A F7 F8 F9 F10 F11 <1 Λ & 6 28 7 8 R T Y U 61 - 0 0 P D F G H J K L X. C 9e g > < B N M H дв V . 2 To advertise or not to advertise uppose that two firms, Lucky Bird and Full Coop, are the onl ves the profit (in millions of dollars) earned by each compan Full Coop Advertise Doesn't Advertise Advertise 7,7 14, 3 Lucky Bird Doesn't Advertise 3, 14 9, 9 For example, the lower left cell of the matrix shows that if Full C million, and Lucky Bird will make a profit of $3 million. Assume t maximizing firms. If Lucky Bird chooses to advertise, it will earn a profit of $ advertise. If Lucky Bird chooses not to advertise, it will earn a profit of $
For example, the lower left cell of the matrix shows that if Full Coop advertises and Lucky Bird does not advertise, Full Coop will make a profit of $14 million, and Lucky Bird will make a profit of $3 million. Assume this is a simultaneous game and that Lucky Bird and Full Coop are both profit- maximizing firms. If Lucky Bird chooses to advertise, it will earn a profit of $ advertise. million if Full Coop advertises and a profit of $ million if Full Coop does not If Lucky Bird chooses not to advertise, it will earn a profit of $ not advertise. million if Full Coop advertises and a profit of $ million if Full Coop does S If Full Coop advertises, Lucky Bird makes a higher profit if it chooses If Full Coop doesn't advertise, Lucky Bird makes a higher profit if it chooses Suppose that both firms start off by deciding not to advertise. If the firms act independently, what strategies will they end up choosing? Both firms will choose not to advertise. O Lucky Bird will choose not to advertise and Full Coop will choose to advertise. O Lucky Bird will choose to advertise and Full Coop will choose not to advertise. Both firms will choose to advertise. Again, suppose that both firms start off not advertising. If the firms decide to collude, what strategies will they end up choosing? O Lucky Bird will choose not to advertise and Full Coop will choose to advertise. Both firms will choose not to advertise. Lucky Bird will choose to advertise and Full Coop will choose not to advertise. Both firms will choose to aduertice F2 80 a F4 @ 12 $ 74 #3 W E S N MacBook Air F5 % 25 বর Dil DD A F7 F8 F9 F10 F11 <1 Λ & 6 28 7 8 R T Y U 61 - 0 0 P D F G H J K L X. C 9e g > < B N M H дв V . 2 To advertise or not to advertise uppose that two firms, Lucky Bird and Full Coop, are the onl ves the profit (in millions of dollars) earned by each compan Full Coop Advertise Doesn't Advertise Advertise 7,7 14, 3 Lucky Bird Doesn't Advertise 3, 14 9, 9 For example, the lower left cell of the matrix shows that if Full C million, and Lucky Bird will make a profit of $3 million. Assume t maximizing firms. If Lucky Bird chooses to advertise, it will earn a profit of $ advertise. If Lucky Bird chooses not to advertise, it will earn a profit of $
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:For example, the lower left cell of the matrix shows that if Full Coop advertises and Lucky Bird does not advertise, Full Coop will make a profit of $14
million, and Lucky Bird will make a profit of $3 million. Assume this is a simultaneous game and that Lucky Bird and Full Coop are both profit-
maximizing firms.
If Lucky Bird chooses to advertise, it will earn a profit of $
advertise.
million if Full Coop advertises and a profit of $
million if Full Coop does not
If Lucky Bird chooses not to advertise, it will earn a profit of $
not advertise.
million if Full Coop advertises and a profit of $
million if Full Coop does
S
If Full Coop advertises, Lucky Bird makes a higher profit if it chooses
If Full Coop doesn't advertise, Lucky Bird makes a higher profit if it chooses
Suppose that both firms start off by deciding not to advertise. If the firms act independently, what strategies will they end up choosing?
Both firms will choose not to advertise.
O Lucky Bird will choose not to advertise and Full Coop will choose to advertise.
O Lucky Bird will choose to advertise and Full Coop will choose not to advertise.
Both firms will choose to advertise.
Again, suppose that both firms start off not advertising. If the firms decide to collude, what strategies will they end up choosing?
O Lucky Bird will choose not to advertise and Full Coop will choose to advertise.
Both firms will choose not to advertise.
Lucky Bird will choose to advertise and Full Coop will choose not to advertise.
Both firms will choose to aduertice
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Transcribed Image Text:To advertise or not to advertise
uppose that two firms, Lucky Bird and Full Coop, are the onl
ves the profit (in millions of dollars) earned by each compan
Full Coop
Advertise Doesn't Advertise
Advertise
7,7
14, 3
Lucky Bird
Doesn't Advertise
3, 14
9, 9
For example, the lower left cell of the matrix shows that if Full C
million, and Lucky Bird will make a profit of $3 million. Assume t
maximizing firms.
If Lucky Bird chooses to advertise, it will earn a profit of $
advertise.
If Lucky Bird chooses not to advertise, it will earn a profit of $
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