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3. Suppose that total unit sales of iPhones and Android phones depends on both Apple's and Google's advertising expenditures: Google Advertise Don't Advertise 100, 100
3. Suppose that total unit sales of iPhones and Android phones depends on both Apple's and Google's advertising expenditures: Google Advertise Don't Advertise 100, 100 120, 60 Apple -- Don't 60, 120 80, 80 The matrix above shows unit sales, not prots or payoifs. To nd the rm's prots from the sales gures, assume that the price is $30, that the margjnal cost is $20, and that the xed cost of advertising is $300. (a) Fill in the prots in the following simultaneous-move game (remember to subtract the xed advertising costs ONLY if the rm advertises]: Googlc Advertise Don't Apple (b) What is the Nash equilibrium of the game? Which strategies yield the highest industry prots (Apple plus Google)? Explain in words why rms might not be expected to choose the strategies that yield the highest industry prots
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