Question : Two rival firms considering sponsoring an event. Each firm believes : 1377506

 

 

Two rival firms are considering sponsoring an event. Each firm believes that sponsoring the event will increase their 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.

9) Refer to the scenario above. What is likely to be the impact on Firm A’s sales if both the firms decide to sponsor the event?

A) A 5% increase in sales

B) A 2% increase in sales

C) 0% increase in sales

D) A 10% increase in sales

10) Refer to the scenario above. What is likely to be the impact on Firm B’s sales if none of the firms decide to sponsor the event?

A) A 7% increase in sales

B) 0% increase in sales

C) A 2% increase in sales

D) A 10% increase in sales

11) Refer to the scenario above. What is likely to be the impact on Firm A’s sales if Firm A decides to sponsor the event while Firm B decides not to sponsor the event?

A) A 5% increase in sales

B) A 2% increase in sales

C) A 7% increase in sales

D) 0% increase in sales

12) Refer to the scenario above. What is likely to be the impact on Firm A’s sales if Firm B decides to sponsor the event while Firm A decides not to sponsor the event?

A) A 5% increase in sales

B) A 7% increase in sales

C) 0% increase in sales

D) A 2% increase in sales

13) Refer to the scenario above. What is likely to be the impact on Firm B’s sales if Firm A decides to sponsor the event while Firm B decides not to sponsor the event?

A) 0% increase in sales

B) A 7% increase in sales

C) A 5% increase in sales

D) A 10% increase in sales

14) Refer to the scenario above. What is likely to be the impact on Firm B’s sales if Firm B decides to sponsor the event while Firm A decides not to sponsor the event?

A) A 10% increase in sales

B) A 7% increase in sales

C) A 2% increase in sales

D) A 5% increase in sales

15) Refer to the scenario above. Which of the following is true?

A) Company A should not advertise its products irrespective of what Company B does.

B) Company B should not advertise if Company A decides to advertise its products.

C) Company A should advertise if Company B decides to advertise its products.

D) Company B should not advertise its product irrespective of what Company A does.

16) Refer to the scenario above. Suppose the cost of advertising in this industry is very high and each company will incur a cost of $3 million annually if they choose to advertise. Which of the following is true in this case?

A) Company A’s best response is to advertise if Company B advertises.

B) Company B’s best response is to advertise irrespective of what Company A does.

C) Company A’s dominant strategy is to advertise.

D) This game does not have a dominant strategy equilibrium.

17) Refer to the scenario above. If the cost of advertising is negligible, what will be the outcome of this game?

A) Company A will advertise its products while Company B will not advertise.

B) Company B will advertise while Company A will not advertise.

C) Both the companies will advertise their products.

D) None of the companies will advertise its products.

 

 

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