4. Use the Table below: Nike and Reebok Sales. Reebok and Nike must decide whether to have a sale or not, based on the potential economic profits shown in the table. Table: Nike and Reebok Sales Reebok Sale No Sale Reebok: $5M Sale Nike Nike: $5M Reebok: $IM Nike: $30M No Sale Reebok: $30M Reebok: $20M Nike: SIM Nike: $20M a.{9} Is there a Nash equilibrium in this game? If there is what is it, and if not, why not? b. (8.5) If Nike and Reebok were to collude to maximize joint profits, what decision should each firm pursue?

5. The role of brand names and advertising Which of the following statements about expenditures on advertising is true? When a firm spends a small amount of money on advertising, this signals that the quality of the good is high. If a firm knows its product is of low quality, it will be willing to spend large amounts of money on advertising. O When a firm spends a large amount of money on advertising, advertising can be construed as a signal of quality. Read the following example and determine whether it illustrates a common critique or defense of advertising. While shopping for soft drinks, Charlotte is trying to determine whether to purchase the generic seltzer or the brand La Crosse. Although she could not notice the difference between the two in a taste test, she buys the higher-priced La Crosse because she has seen it advertised as being "La drink of La Summer." This illustrates a common of advertising.

6. The role of brand names and advertising Which of the following statements about expenditures on advertising is true? O When a firm spends a small amount of money on advertising, this signals that the quality of the good is high. O when a firm spends a large amount of money on advertising, advertising can be construed as a signal of quality. O If a firm knows its product is of low quality, it will be willing to spend large amounts of money on advertising. Read the following example and determine whether it illustrates a common critique or defense of advertising. Yakov sees a commercial for a Brand X clothing company that depicts the wearers of the clothes out having a good time with friends. Although he doesn't particularly need new clothes, the commercial prompts him to buy a Brand X t-shirt. This illustrates a common ▼ of advertising.

. Do you consider yourself a member of any brand communities (formal or informal)? If so, what effect do these groups have on your purchasing behavior?