Below is a profit pay-off matrix for two oligopoly firms: Calvin Inc.and Hobbs Ltd.Calvin's profits are shown in the upper portion of each box and Hobb's are in the lower portion.
-Refer to the information above to answer this question.Which of the following statements is correct if Calvin and Hobbs reach a secret agreement between themselves concerning advertising budgets and this agreement holds because neither cheats?
A) Both will have a low advertising budget and both will earn profits of $600.
B) Both will have a low advertising budget and both will earn profits of $400.
C) Both will have a high advertising budget and both will earn profits of $800.
D) Both will have a high advertising budget and Calvin will earn a profit of $300 and Hobbs will earn a profit of $800.
Correct Answer:
Verified
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