Millie Bush Has Written a Best-Seller

Multiple Choice

Millie Bush has written a best-seller.Revenues net of production costs are $300T^1/3A^1/3, where T is the number of publicity trips Millie takes and A is the number of ads for the book that appear.Millie has to pay for all of her own publicity trips, which cost $100 each.Her publisher pays for the advertising, which costs $100 per ad.Revenues from the book are split equally between Millie and her publisher.Let T₁ be the number of trips that Millie would choose to make in a Nash equilibrium where she chooses the number of trips and the publisher chooses the amount of advertising.Let T₂ be the number of trips that Millie should make if trips and advertising are determined so as to maximize total profits net of trip and ad costs.

A) T₁ = 1 and T₂ = 1.
B) T₁ = 1 and T₂ = 2.
C) T₁ = 2 and T₂ = 1.
D) T₁ = 1 and T₂ = 1/8.
E) T₁ = 1/8 and T₂ =1.