Multiple Choice
Suppose that Big & Tall and Short & Sweet are two clothing manufacturers and each chooses independently whether to advertise or not advertise. If neither advertises, each gets $100 million in profit; if both advertise, their profits are $50 million each; and if one advertises, while the other does not, the advertiser gets $150 million in profit, and the other gets $20 million in profit. What is the Nash equilibrium?
A) Both may or may not advertise.
B) One will advertise, and the other will not.
C) Both will advertise.
D) Neither will advertise.
Correct Answer:
Verified
Correct Answer:
Verified
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