O a. It makes more sense to raise price when advertising makes demand less elastic b. Some consumers may infer high quality from high price O c. Promotional campaigns do not affect consumer's perception on quality O d. Low prices can indicate lower quality given that no other information is available Consider the following information for a simultaneous move game: Two discount stores (megastore and superstore) are nterested in expanding their market share through advertising. The table below depicts the strategic outcomes (profits) of both tores with and without advertising. Superstore Advertise Don't Advertise Advertise $95, $80 $305, $55 Megastore
O a. It makes more sense to raise price when advertising makes demand less elastic b. Some consumers may infer high quality from high price O c. Promotional campaigns do not affect consumer's perception on quality O d. Low prices can indicate lower quality given that no other information is available Consider the following information for a simultaneous move game: Two discount stores (megastore and superstore) are nterested in expanding their market share through advertising. The table below depicts the strategic outcomes (profits) of both tores with and without advertising. Superstore Advertise Don't Advertise Advertise $95, $80 $305, $55 Megastore
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:All of the following are true, except
O a. It makes more sense to raise price when advertising makes demand less elastic
O b. Some consumers may infer high quality from high price
O c. Promotional campaigns do not affect consumer's perception on quality
O d. Low prices can indicate lower quality given that no other information is available
Consider the following information for a simultaneous move game: Two discount stores (megastore and superstore) are
interested in expanding their market share through advertising. The table below depicts the strategic outcomes (profits) of both
stores with and without advertising.
Superstore
Advertise
Don't Advertise
Advertise
$95, $80
$305, $55
Megastore
Don't Advertise $65, $285
$165, $115
The Nash equilibrium for the game is
O a. For megastore to advertise and for superstore not to advertise
O b. For both stores to advertise
O c. For both stores to not advertise
O d. For megastore not to advertise and for superstore to advertise
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