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ECON 5136 Jet Cruises Ad No Ad Easy Sail Easy Sail No Ad Ad No Ad Ad JC: $5 M JC: $4 M JC: $10

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ECON 5136 Jet Cruises Ad No Ad Easy Sail Easy Sail No Ad Ad No Ad Ad JC: $5 M JC: $4 M JC: $10 M JC: $2 M ES: $2 M ES: $3 M ES: $2 M ES: $4 M Jet Cruises wants to prevent Easy Sail from entering the sailboat market. The above game tree illustrates the different strategies and corresponding payoffs for the two firms. Both Jet Cruises and Easy Sail have the same strategies of advertising (Ad) or not advertising (No Ad). The payoffs represent net profit in millions. a. If Jet Cruises chooses to Ad and Easy Sail then chooses to No Ad, Jet Cruises earns million in net profit and Easy Sail earns million. b. The Nash equilibrium of this game is for Jet Cruises to and Easy Sail to

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