Two firms, Snow Kings and Ski Express, at Denver International Airport have franchises to carry passengers to and from the mountains. These two firms compete through advertising. Their payoff matrix is below. Profits per customer are represented in the following format (Snow Kings, Ski Express Snow Kings Advertise Don't Advertise Advertise 25, 15 15, 20 Ski Express Don't Advertise 30,0 40,5 What combination of strategies achieves the Nash equilibrium in this game? a) 25,25 (Advertise, Advertise) b) 15,20 (Advertise, Advertise) c) 25,0 (Advertise, Don't Advertise) d) 40,5 (Advertise, Don't Advertise)

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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Two firms, Snow Kings and Ski Express, at Denver International Airport have franchises to
carry passengers to and from the mountains. These two firms compete through advertising. Their
payoff matrix is below. Profits per customer are represented in the following format (Snow
Kings, Ski Express
Snow Kings
Advertise
Don't Advertise
Advertise
25, 15
15, 20
Ski Express
Don't Advertise
30,0
40,5
What combination of strategies achieves the Nash equilibrium in this game?
a) 25,25 (Advertise, Advertise)
b) 15,20 (Advertise, Advertise)
c) 25,0 (Advertise, Don't Advertise)
d) 40,5 (Advertise, Don't Advertise)
Transcribed Image Text:Two firms, Snow Kings and Ski Express, at Denver International Airport have franchises to carry passengers to and from the mountains. These two firms compete through advertising. Their payoff matrix is below. Profits per customer are represented in the following format (Snow Kings, Ski Express Snow Kings Advertise Don't Advertise Advertise 25, 15 15, 20 Ski Express Don't Advertise 30,0 40,5 What combination of strategies achieves the Nash equilibrium in this game? a) 25,25 (Advertise, Advertise) b) 15,20 (Advertise, Advertise) c) 25,0 (Advertise, Don't Advertise) d) 40,5 (Advertise, Don't Advertise)
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