Scenario: Two rival firms are considering sponsoring an event. Each firm believes that sponsoring the event will increase its sales by a certain percentage. The payoff matrix showing the increase in sales for the firms is given below. The first number listed in each cell is the payoff to the row player, and the second number listed is the payoff to the column player.

-Refer to the scenario above.What is likely to be the impact on Firm A's sales if Firm A decides not to sponsor the event?
A) A 7 percent increase in sales
B) A 0 percent increase in sales
C) A 2 percent increase in sales
D) A 10 percent increase in sales

Question

Scenario: Two rival firms are considering sponsoring an event. Each firm believes that sponsoring the event will increase its sales by a certain percentage. The payoff matrix showing the increase in sales for the firms is given below. The first number listed in each cell is the payoff to the row player, and the second number listed is the payoff to the column player.
 
-Refer to the scenario above.What is likely to be the impact on Firm A's sales if Firm A decides not to sponsor the event?
A) A 7 percent increase in sales 
B) A 0 percent increase in sales 
C) A 2 percent increase in sales 
D) A 10 percent increase in sales

Quizplus · Accepted Answer

If Firm A decides not to sponsor the event, it will receive a payoff of 0, which means that its sales will not increase at all. However, if it does sponsor the event, there is a possibility of either a 7% increase or a 2% increase in sales. Therefore, the best choice for Firm A would be to sponsor the event.

Scenario: Two Rival Firms Are Considering Sponsoring an Event