How might advertising and brand names reduce economic well-being?
Answer the following prompts by clicking on the “reply” button below. Your post will be added to a discussion thread. Answers are due by 11:59pm on Wednesday, July 1.
|Budgets and Profits|
|High Budget||Low Budget|
|Tech A||High Budget||$18m. , $14m||$24m. , $10m|
|Low Budget||$14m. , $22m||$25m. , $18m|
1. Consider two software tech firms, Tech A and Tech B. Each firm must decide on the size of their research and development budget: high budget or low budget. The payoff matrix displays the possible choices and profits
a. Does Tech A have a dominant strategy? If yes, what is their dominant strategy?
b. Does Tech B have a dominant strategy? If yes, what is their dominant strategy?
c. What is the Nash equilibrium?
2. How might advertising and brand names reduce economic well-being? How might advertising and brand names increase economic well-being?
3. Define and give an example of a common resource (something other than fish in the ocean). Without government intervention, will people use this good too much or too little? Why?