Use the table below to answer the following questions.
Table 15.2.4

-Refer to Table 15.2.4. The marketers of Budweiser Light beer and Miller Lite beer must decide whether or not to offer new advertising campaigns promoting their products. The payoffs in the table are the economic profit made by Bud and Miller. Which one of the following observations is correct?
A)The equilibrium of the game is that both firms will conduct new advertising campaigns.
B)The equilibrium of the game is that neither firm will conduct a new advertising campaign.
C)The equilibrium solution has Bud conducting a new advertising campaign, but not Miller.
D)The equilibrium solution has Miller conducting a new advertising campaign, but not Bud.
E)There is no equilibrium to this game-the industry will have alternating cycles of advertising and no advertising.

Question

Use the table below to answer the following questions.
Table 15.2.4
 
-Refer to Table 15.2.4. The marketers of Budweiser Light beer and Miller Lite beer must decide whether or not to offer new advertising campaigns promoting their products. The payoffs in the table are the economic profit made by Bud and Miller. Which one of the following observations is correct?
A)The equilibrium of the game is that both firms will conduct new advertising campaigns. 
B)The equilibrium of the game is that neither firm will conduct a new advertising campaign. 
C)The equilibrium solution has Bud conducting a new advertising campaign, but not Miller. 
D)The equilibrium solution has Miller conducting a new advertising campaign, but not Bud. 
E)There is no equilibrium to this game-the industry will have alternating cycles of advertising and no advertising.

Quizplus · Accepted Answer

In a typical payoff matrix for such a game, both firms conducting new advertising campaigns is often a Nash equilibrium, as neither firm can benefit by unilaterally changing their strategy.

Use the Table Below to Answer the Following Questions