Dashboard - Antelope Valley C: X ey MindTap - Cengage Leaming [ R CENGAGE ' MINDTAP b4 Homework (Ch 09) Back to Assignment Attempts Keep the Highest =~ m @ > 7. Game theory Suppose that Fizzo and Pop Hop are the only two firms that sell orange soda. The following payoff matrix shows the profit (in millions of dollars) each company will earn depending on whether or not it advertises: (U Pop Hop Adverfise Doesn't Advertise Adveriise 10, 10 18,2 Fizzo DossntAdvertise 2,18 mnm For example, the upper right cell shows that if Fizzo advertises and Pop Hop doesn't advertise, Fizzo will make a profit of $18 million, and Pop Hop will make a profit of $2 million. Assume this is a simultaneous game and that Fizzo and Pop Hop are both profit-maximizing firms. If Fizzo decides to advertise, it will eam a profit of (S| million if Pap Hop advertises and a pr advertise. of 5| million if Pop Hop does nct If Fizzo decides not to advertise, it wil earn 3 profit of S| million if Pop Hop advertises and a profit of S| million if Pop Hop does not advertise. If Pop Hop advertises, Fizzo makes a higher profit if it chooses v . If Pop Hop doesn't advertise, Fizzo makes a higher profit if it chooses - . Suppose that both firms start off not advertising. If the firms act independently, what strategies will they end up choosing? O Fizzo will choose not to advertise and Pop Hop will choose to advertise. O Both firms will choose not to advertise. [ R P CENGAGE ' MINDTAP b4 Homework (Ch 09) If Fizzo decides not to advertise, it will earn a profit of million if Pop Hop advertises and a profit of million if Pop Hop does not advertise If Pop Hop advertises, Fizzo makes a higher profit if it chooses m @ > If Pop Hop doesn't advertise, Fizzo makes a higher profit if it chooses Suppose that both firms start off not advertising. If the firms act independently, what strategies will they end up choosing? (U O Fizzo will choose not to advertise and Pop Hop will choose to advertise. O Both firms will choose not to advertise. O Fizzo will choose to advertise and Pop Hop will choose not to advertise. O Both firms will choose to advertise. Again, suppose that both firms start off not advertising. If the firms decide to collude, what strategies will they end up choosing? Fizzo will choose to advertise and Pop Hop will choose not te advertise.