If you advertise and your rival advertises, you each will earn $4 million in profits.If neither of you advertise, you will each earn $10 million in profits.However, if one of you advertises and the other does not, the firm that advertises will earn $1 million and the non advertising firm will earn $5 million.If you and your rival plan to hand your business down to your children (and this "bequest" goes on forever) then a Nash equilibrium is for each firm to
A) not advertise until the rival does, and then to advertise for ever.
B) never advertise.
C) always advertise.
D) advertise until the rival does not advertise, and then not advertise forever.
Correct Answer:
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