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Please answer the following questions. State whether it is true or false and provide a one sentence explanation. The following questions (1-4) refer to the
Please answer the following questions. State whether it is true or false and provide a one sentence explanation.
The following questions (1-4) refer to the following table: Suppose two firms enters market X. They can decide to advertise product X at a cost of A$ or not to advertise. If both firms advertise, each earn a revenue of 1.5B$ (B>A). If only one firm advertise, it gets 2B$ revenue and the firm that did not gets B/2$ revenue. If both firms do not advertise, each get a revenue of BS. Assume that if a firm is indifferent between advertising and not advertising, it will choose not to advertise. Fill in the payoff matrix for this 2x2 game. And answer questions 1-4. Firm 2 Advertise No Advertise Firm 1 Advertise No Advertise 1. If B=10 and A=5, there is 1 Nash equilibriums. True/false Explain: 2. If B=A both firms will not advertise in equilibrium. True/false Explain:3. For some B or A, there may be 2 Nash Equilibriums. True/false Explain: 4. If B>A both firms will not advertise in equilibrium. True/false ExplainStep by Step Solution
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