Multiple Choice
If you advertise and your rival advertises,you each will earn $3 million in profits.If neither of you advertises,you will each earn $7 million in profits.However,if one of you advertises and the other does not,the firm that advertises will earn $10 million and the non-advertising firm will earn $1 million.If you and your rival plan to be in business for 15 years,then the Nash equilibrium is for:
A) you and your rival to not advertise in any year.
B) you and your rival to advertise every year.
C) neither firm to advertise in early years, but to advertise in later years.
D) each firm to advertise in early years, but not advertise in later years.
Correct Answer:
Verified
Correct Answer:
Verified
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