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Suppose that Fizzy Soda and Townie Soda must choose whether to advertise their soft drinks. In a Nash equilibrium, both firms choose to advertise and
- Suppose that Fizzy Soda and Townie Soda must choose whether to advertise their soft drinks. In a Nash equilibrium, both firms choose to advertise and earn weekly profits of $80,000. Which of the following statements is (are) TRUE?
- I. Neither firm has incentive to change its advertising strategy, given the strategy choice of its rival.
- II. If Townie Soda decided to stop advertising, its profits would fall below $80,000.
- III. If both firms stopped advertising, it is possible that each firm could earn profits greater than $80,000
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