Table 11-6 Godrickporter and Star Connections Are the Only Two Airport Shuttle

Table 11-6
$\begin{array}{c} \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad\text { Godrickporter's (G) Choices }\\\text { Star Connections' (S) Choices }\begin{array}{|c|c|c|}\hline & {\begin{array}{c}\text { Increase } \\\text { advertising } \\\text { budget }\end{array}} & {\begin{array}{c}\text { Leave } \\\text { advertising } \\\text { budget as is }\end{array}} \\\hline \begin{array}{c}\text { Increase advertising } \\\text { budget }\end{array} & \begin{array}{c}\mathrm{G}: \$ 16,000 \text { profit } \\\mathrm{S}: \$ 8,000 \text { profit }\end{array} & \begin{array}{c}\mathrm{G}: \$ 12,000 \text { profit } \\\mathrm{S}: \$ 15,000 \text { profit }\end{array} \\\hline \begin{array}{c}\text { Leave advertising } \\\text { budget as is }\end{array} & \begin{array}{l}\mathrm{G}: \$ 8,000 \text { profit } \\\mathrm{S}: \$ 10,000 \text { profit }\end{array} & \begin{array}{l}\mathrm{G}: \$ 6,000 \text { profit } \\\mathrm{S}: \$ 12,000 \text { profit }\end{array} \\\hline\end{array}\end{array}$
Godrickporter and Star Connections are the only two airport shuttle and limousine rental service companies in the mid-sized town of Godrick Hollow. Each firm must decide on whether to increase its advertising spending to compete for customers. Table 11-6 shows the payoff matrix for this advertising game.
-Refer to Table 11-6.What is the Nash equilibrium in this game?

A) There is no Nash equilibrium.
B) Godrickporter increases its advertising budget, but Star Connections does not.
C) Star Connections increases its advertising budget, but Godrickporter does not.
D) Both Godrickporter and Star Connections increase their advertising budgets.

Correct Answer:

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